IMF warns Middle East conflict compounding regional economic growth

The International Monetary Fund (IMF) has raised concerns over the potential spillover effects of the ongoing conflict in the Middle East on trade and growth prospects for the MENA region. Jihad Azour, Director of the Middle East And Central Asia at IMF, shared insights during a recent interview with CNBC Africa, highlighting the complexities and uncertainties facing the region. Azour emphasized that the economic recovery in the region has been uneven, with some countries experiencing improvements, while others continue to face challenges. He pointed out that while there has been progress in addressing issues like inflation, the persistent conflict has resulted in both humanitarian and economic impacts that are casting a shadow over future projections. The conflict in the Middle East has not only had immediate effects on neighboring countries like Lebanon, Jordan, Iraq, and Egypt but has also had broader regional repercussions. Trade disruptions, particularly through the Red Sea, have caused significant economic uncertainties and impacted key sectors such as tourism. The region has also witnessed fluctuations in the oil market, although some stability has been restored due to excess supply and diversified shipping routes. Looking ahead, Azour underscored the importance of policy actions to mitigate the impact of the conflict on affected countries. He recommended enhancing capacity to respond to shocks, maintaining prudent monetary policies, and addressing fiscal challenges, especially for countries with high levels of debt. Azour also highlighted the need for structural reforms to stimulate economic growth, particularly through technology and climate investments. The conversation then shifted to Africa's role in the global trade landscape and the implications of the conflict on the continent. Azour noted that while Africa holds substantial economic potential, there are existing fragilities that must be addressed. Connectivity issues, both in terms of technology and infrastructure, need to be strengthened to unlock Africa's full economic potential. Additionally, there is a need for continued international support and aid to ensure sustainable growth and development in the region. The recent Sudan crisis was also discussed, with concerns raised about its potential to disrupt trade and further impact regional stability. Azour acknowledged the complexity of the situation and emphasized the importance of addressing fragilities within African countries to realize their economic potential. In conclusion, the IMF's warnings regarding the Middle East conflict serve as a stark reminder of the challenges facing the region and the broader implications for global trade and economic growth. As tensions persist and uncertainties loom, concerted efforts are needed to address the immediate impacts of the conflict, implement sound economic policies, and foster sustainable development to secure the region's future prosperity.