IMF Chief Says Hamas-Israel Conflict Is ‘Darkening the Horizon’ for World Economy

Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, addresses the media on the fourth day of the annual meeting of the IMF and the World Bank, following last month's deadly earthquake, in Marrakech, Morocco, October 12, 2023. REUTERS/Susana Vera Acquire Licensing Rights
Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, addresses the media on the fourth day of the annual meeting of the IMF and the World Bank, following last month's deadly earthquake, in Marrakech, Morocco, October 12, 2023. REUTERS/Susana Vera Acquire Licensing Rights
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IMF Chief Says Hamas-Israel Conflict Is ‘Darkening the Horizon’ for World Economy

Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, addresses the media on the fourth day of the annual meeting of the IMF and the World Bank, following last month's deadly earthquake, in Marrakech, Morocco, October 12, 2023. REUTERS/Susana Vera Acquire Licensing Rights
Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, addresses the media on the fourth day of the annual meeting of the IMF and the World Bank, following last month's deadly earthquake, in Marrakech, Morocco, October 12, 2023. REUTERS/Susana Vera Acquire Licensing Rights

International Monetary Fund managing director Kristalina Georgieva said on Thursday the Israel-Hamas conflict threatened to darken an already murky global economic outlook.

Georgieva said severe shocks were becoming "the new normal" in a global economy characterized by weak growth.

"Very clearly, this is a new cloud on not the safest horizon for the world economy, a new cloud darkening this horizon," she told a news conference at the annual meetings of the IMF and World Bank in Marrakech, Morocco.

The IMF has kept its growth forecast at 3.0 percent for this year but lowered it to 2.9 percent for 2024.

"It's heartbreaking to see innocent civilians dying," an emotional Georgieva told reporters.

"We do need to build our agility in terms of anticipating shocks and being quick to respond," she said.

"We are closely monitoring how the situation evolves, how it is affecting, especially oil markets," Georgieva said. There had been some fluctuations in oil prices and reactions in markets, but it was too early to predict the economic impact, she added.

Jihad Azour, IMF Director of the Middle East and Central Asia Department, said it is difficult to have a ‘clear reading’ about the conflict’s economic impact.

IMF research suggests that if there is something like a 10% increase in oil prices, this would weigh down on global output by about 0.15% in the following year and would increase global inflation by about 0.4 percentage point.

IMF chief economist Pierre-Olivier Gourinchas said it is "too early" to assess its impact on global economic growth.

A financial expert from one of the investment banks, speaking on condition of anonymity, told Asharq Al-Awsat that if this situation continues then prices will increase, including oil prices.

He added that it is impossible to predict any scenarios because they are linked to the updates of the war, like the Russian-Ukrainian war.



Japan Imposes New Regulations on Chip Supply-Chain Network

Pedestrians wak past an electronic board displaying the Nikkei Stock Average figure, in Tokyo, Japan (EPA)
Pedestrians wak past an electronic board displaying the Nikkei Stock Average figure, in Tokyo, Japan (EPA)
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Japan Imposes New Regulations on Chip Supply-Chain Network

Pedestrians wak past an electronic board displaying the Nikkei Stock Average figure, in Tokyo, Japan (EPA)
Pedestrians wak past an electronic board displaying the Nikkei Stock Average figure, in Tokyo, Japan (EPA)

Japan has decided to apply foreign trade regulations to chipmaking equipment as part of its efforts to secure stable supply chains, the Finance Ministry said Friday.

Foreign investors are now required to give prior notice when conducting direct investment in equipment tied to chipmaking, including when acquiring a 1% or bigger stake in a listed company or buying shares in an unlisted company, the ministry said in a statement, according to Bloomberg.

The move also aims to address the risk of technology leakage and keep commercial technologies from being used for military purposes, it said.

Other products added to the list of so-called “core business sectors” include advanced electronic components, machine tool components, marine engines, fiber optic cables and multifunctional machines, according to the ministry.

The targeted move will help the government enhance national security while its impact on companies is expected to be limited, a Finance Ministry official told Bloomberg.

The move comes as Japan tries to revive its own capacity to produce semiconductors as a pillar of its economic security strategy.

Japan has already earmarked some ¥4 trillion ($26.9 billion) over the last three years to recharge its semiconductor sectors and promote digitalization.

In the markets, Japan's Nikkei share average climbed nearly 3% on Friday and notched its best week in more than four years, as strong US retail sales data soothed fears of a recession in the world's largest economy and Japan's top trading partner.
The Nikkei closed 3.6% higher at 38,062.67, locking in its second-largest daily gain for the year, while the broader Topix finished up about 3% at 2,678.60.

The Nikkei logged its biggest weekly gain since April 2020, rising over 8%, buoyed by easing concerns about the state of the US economy, a pause in the yen's rapid appreciation and a pick-up in Japan's economic growth.

Wall Street's main indexes closed higher on Thursday after US retail sales increased 1% in July following a downwardly revised 0.2% drop in June.

The rally was broad-based, with 219 of the Nikkei's 225 constituents advancing against 5 decliners, while shares of many big names surged.

Nikkei heavyweight Fast Retailing jumped 6.2%, while chip-related share Tokyo Electron gained 4.8%, along with peer Advantest, adding 6.8%.

Meanwhile, the yen weakened against the dollar overnight in a boost to Japan's export-related shares like automaker Toyota Motor, which rose about 2%.

The Nikkei fell more than 12% on Aug. 5 in its biggest single-day decline since Black Monday amid a storm of concerns, including US recession fears sparked by a weak jobs report and a sharply stronger yen.

It has since clawed back those losses but remains well off an all-time peak of 42,426.77 touched in mid-July.

Among individual shares on Friday, electrical component maker Fujikura rallied over 11% to become the biggest percentage gainer.