IMF Downgrades Middle Eastern Economic Growth Forecast Amid Oil Caps and Regional Conflict

The International Monetary Fund (IMF) has lowered its growth projections for Middle Eastern economies, attributing this revision to oil production limitations and the ongoing Israel-Gaza conflict. In its latest World Economic Outlook update, the IMF pointed out that while the global economy showed resilience last year, it now faces challenges due to a slowing pace of disinflation and the potential for prolonged high interest rates.

The IMF has maintained its global growth forecast for 2024 at 3.2 percent, with a slight increase to 3.3 percent expected in 2025. These figures align with earlier projections made in April, though there are notable changes in growth dynamics across various regions. According to IMF chief economist Pierre-Olivier Gourinchas, the economic forecast for the upcoming years remains broadly stable, but certain near-term risks have become more pronounced.

Inflation remains a major concern for the IMF despite some success in global efforts to control it. The organization expects global inflation to decline to 5.9 percent this year from 6.7 percent last year. However, the pace of disinflation has been slower in some advanced economies, particularly the United States, where the risk of rising inflation could reverse previous gains.

The IMF highlighted that the momentum for global disinflation is weakening, indicating potential future challenges. These issues might force central banks, including the U.S. Federal Reserve, to keep borrowing costs elevated for a longer duration. This scenario poses risks to global economic growth and could exert upward pressure on the dollar, negatively impacting emerging and developing economies. As these factors evolve, the IMF remains cautious about the economic outlook, balancing risks and acknowledging the complexities that lie ahead.

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