International Monetary Fund :"Weekend Read: Global Impact of the Middle East War "

 

Dear MARIA,   In today's edition, we highlight: How the War in the Middle East Has Affected Oil Exporters & Importers Africa Faces Mounting Risks Global Disruptions to Shipping & Air Travel Sin Taxes OIL How the Middle East War Has Affected Oil Exporters and Importers Higher oil prices and supply risks are affecting countries very differently. Oil exporters are seeing revenue gains, while importers face higher inflation and tighter policy trade-offs.   An IMF Chart of the Week shows how exposure varies depending on a country’s energy balance, inflation dynamics, and ability to buffer shocks. Clear communication, well-targeted support, and credible macro frameworks are key to managing the impact. Check out the Chart of the Week AFRICA Africa Faces Mounting Risks Just as Growth Gains Take Hold The latest global shocks are complicating Sub-Saharan Africa’s economic recovery. Higher energy prices and interest rates, as well as rising geopolitical tensions are putting pressure on growth, inflation, and public finances across the region.   New IMF analysis projects growth to slow to 4.3 percent this year, 0.3 percentage points below pre-war forecasts, and project inflation to rise. That may sound benign by global standards, but for a region where rapid growth is imperative to create millions of new jobs for the rapidly expanding population, any hit to growth is a problem.   Many countries have shown resilience, supported by reforms and improving economic frameworks. But governments face difficult trade‑offs between protecting vulnerable households and preserving hard‑won macroeconomic stability. Maintaining fiscal discipline, strengthening revenue collection, and fast-tracking structural reforms will be critical to weathering the current shocks and sustaining growth. Read the blog SHIPPING AND AIR TRAVEL Global Disruptions Are Testing How the World Moves Goods and People Shipping and air travel disruptions linked to the war in the Middle East are creating new fault lines in the global economy—and they are weighing on growth and livelihoods. Damage to infrastructure and the closure of the Strait of Hormuz have disrupted the flow of energy, goods, and people.   Even in the best case, there will be no neat and clean return to the way things were.   The IMF’s new Chart of the Week highlights one reason for concern. Attacks on shipping that began in 2023 forced vessels to reroute around Africa rather than transit the Red Sea and Suez Canal. More than two years later, traffic through the Bab el‑Mandeb strait between Yemen and Djibouti remains at about half its pre‑attack level, demonstrating how persistent such disruptions have become. Explore the latest data SIN TAXES Taxing Bad Habits So‑called “sin taxes” on tobacco, alcohol, sugary drinks, and other harmful products can do more than raise revenue: they can also improve public health.    In the latest IMF Podcast, economist Christoph Rosenberg explains why these taxes are relatively easy to collect, how well‑designed taxes can nudge behavior toward healthier choices, and what policymakers should consider to make them effective, fair, and hard to avoid.   He also points to the role international and regional bodies can play. For example, the European Union has a draft tobacco directive with 13 distinct categories of smoking products with minimum tax rates, so the region can address cross-border trade. Listen to the podcast Thank you very much for your interest in the Weekend Read! Be sure to let us know what issues and trends we should have on our radar.  Noha Elbadawy  Editor | IMF Weekend Read   nelbadawy@IMF.org Stay connected with the International Monetary Fund:       This email was sent to politikimx@gmail.com on behalf of: International Monetary Fund 1900 Pennsylvania Ave NW · Washington, DC · 20431