By Ayo Yusuf
As the World Bank continues to monitor the impact of the Hamas-Israeli war on the world’s economy, the Director-General of the World Trade Organization (WTO), Dr Ngozi Okonjo-Iweala, has warned of a potentially “really big impact” on global trade.
Dr. Okonjo-Iweala who was speaking, Thursday, at the International Monetary Fund and World Bank annual meetings in Marrakesh, Morocco, warned world leaders to seek a quick way to end the conflict, stressing that the violence could add to factors strangulating trade growth.
The WTO boss said factors like higher interest rates, a strained Chinese property market and Russia’s war in Ukraine have already weakened global trade flows, warning that the war could escalate to the Middle East region.
“We hope this ends soon and it’s contained. Our biggest fear is if it widens, because that will then have a really big impact on trade,” she said, adding that “Everybody’s on eggshells and hoping for the best.”
She added that, “There’s uncertainty about whether this is going to spread further to the whole region, which could impact very much on global economic growth. We hope that all the violence will end… because it does create this uncertainty. It’s another dark cloud on the horizon.”
The Geneva-based trade body last week halved its growth forecast for global goods trade this year, citing persistent inflation, higher interest rates, the slowing Chinese economy and the war in Ukraine.
Meanwhile, the International Monetary Fund says it is closely monitoring the impact of the ongoing Israel-Hamas war on the world economy.
The Managing Director of the IMF, Kristalina Georgieva, stated this on Thursday during a press briefing at the ongoing IMF and World Bank Group annual meetings in Marrakech, Morocco.
She said it is too early to say the exact impact on the economy at the moment, but acknowledged the “up and down of oil prices.”
The IMF MD however said that the situation is not all good for the world economy, describing it as “a new cloud darkening this horizon.”
She also said that, “In terms of economic impact, we are very closely monitoring how the situation evolves, how it is affecting especially oil markets. It is too early to say. We have seen some ups and downs in oil prices.
“We have seen some reaction in the markets. As I said, we will be closely monitoring this. Very clearly this is a new cloud on not the sunniest horizon for the world economy, a new cloud darkening this horizon that is not needed. Pray for peace.”
She added that “It is heartbreaking to see innocent civilians dying. An attack from one place on another, causing reciprocity in response.”
According to the IMF chief, it is the innocent who pays the price for the destructive war.
Georgieva said there have been severe shocks that are now becoming the new normal for a world that is weakened by weak growth and economic fragmentation.
According to her, the successive shocks since 2020 have pushed global output down by $3.6 trillion as of this year.
Noting that the loss is not unevenly distributed, the IMF chief said that while the US has already recovered to pre‑pandemic levels, most of the rest of the world has not.
“Low‑income economies have been hardest hit because they have had extremely limited buffers to begin with, so it was hardest for them to protect their economy, to protect their people,” she added.
It would be recalled that in a surprise assault early Saturday, Hamas militants stormed Israeli communities near the Gaza border and fired barrages of rockets, in an attack that claimed more than 1,200 lives.
