International Monetary Fund (IMF) Managing Director Kristalina Georgieva has warned that the war between Israel and Hamas is already affecting economies in the Middle East and could lead to long-term economic damage.
In an interview with CNN's Richard Quest before the Future Investment Initiative (FDI) audience in Saudi Arabia, Georgieva said:
"What we're seeing is more anxiety in an already anxious world. And on a horizon where there were many clouds, another one has appeared and it could deepen."
Georgieva told the conference that the Fund was primarily concerned about the "tragic loss of human life," adding that it was also concerned about "the destruction and reduction of economic activity," such as children not going to school, and the impact on neighboring countries that depend on tourism.
Georgieva also warned investors to expect interest rates to remain high, telling Quest: "We've spent the last 20 years in fantasyland. How can you have zero or negative interest rates and still create savings and capacity to function? You actually will it will be normal to have higher interest rates - the problem is that it happened too quickly and the jump is too big".
When asked if this is exactly what the Fund wanted, Georgieva replied: "We are not thrilled that we got from 0 to 5% so quickly, but we are there. We are there now, and our appeal to everyone is - buckle up. Make sure that you understand interest rates are going to be here for a long time." /BGNES
