The Israel-Gaza war can have “important consequences” on the global economy, especially given the current fight against inflation in many countries, according to Gita Gopinath, the First Deputy Managing Director of the International Monetary Fund (IMF). In an exclusive conversation with NDTV, Gopinath highlighted that if the conflict expands and involves more countries, it could impact oil prices, leading to increased inflation and a negative effect on global GDP. She expressed her distress at the loss of civilian lives and emphasized that the economic ramifications would depend on how the conflict evolves. Gopinath stated, “If it becomes a regional conflict, it can have important consequences. If I was to point to one, it would be the impact on oil prices.” The IMF estimates that a 10% increase in oil prices would reduce world GDP by 0.15 percentage points and raise inflation by 0.4 percentage points, posing further challenges to countries already grappling with inflation. Gopinath further noted that the war could result in migration issues and impact tourism in the region. The rise in oil prices and its effect on inflation remains the primary concern regarding the economic fallout of the conflict, according to the IMF official. Gopinath highlighted the volatility in fuel prices and increased gas prices in Europe due to damage to a gas pipeline. She underlined the challenge of fighting inflation in an environment where countries have experienced high inflation for some time and stated that this could lead to inflation expectations, making it more difficult for central banks to combat rising prices. The Israel-Hamas conflict has claimed over 3,700 lives so far, and there are concerns about an imminent invasion as Israeli tanks remain massed on the border.
Fri. Sep 20th, 2024
