Video|2 October 2024

MENA – Middle East Tensions Rising: How Will It Impact the Global Economy?

Scott Livermore

Chief Economist & Managing Director

Israel’s ground invasion into south Lebanon and its assassination of prominent Hezbollah leaders followed by Iran’s missile attack on Israel marks a significant escalation in the conflict. Oil prices climbed above $75 pb in the initial aftermath and how Israel decides to respond will be critical for determining the economic and financial ramifications.

The odds of a regional war as mapped out in Oxford Economics’ Global Scenarios Service have now heightened. Should this scenario materialise, we anticipate a 0.4ppt hit to global GDP growth in 2025 as oil prices spike to $130 due to disrupted supply.

The GCC could suffer a hit to GDP of 1.5% this year and 0.6% next compared to our baseline amid the energy market disruption and possible disruption in sectors such as travel and tourism. But those maintaining production amid higher oil prices may be able to cushion the impact on their economies.

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