WASHINGTON — The world economy has lost momentum from the impact of higher interest rates, the invasion of Ukraine and widening geopolitical rifts, and it now faces new uncertainty from the war between Israel and Hamas militants, International Monetary Fund warned Tuesday.
“The global economy is limping along, not sprinting," IMF chief economist Pierre-Olivier Gourinchas said at a news conference during the organization's annual meeting in Marrakech, Morocco. If sustained, a 10% increase in oil prices would reduce global economic growth by 0.15% and increase global inflation by 0.4%, Gourinchas said.So far, the increase in oil prices has been “fairly muted,” said Commerzbank commodities analyst Carsten Fritsch. He noted the absence of declarations of support for Hamas from key oil producers Saudi Arabia, the United Arab Emirates, Kuwait and Iraq, which would make it unlikely that they would restrict supply in response to the war.
The United States is a standout in the IMF’s latest World Economic Outlook, which was completed before the outbreak of war between Israel and Hamas. The IMF upgraded its forecast for U.S. growth this year to 2.1% and 1.5% in 2024 .
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