Gaza war a threat to fragile world economy, analysts warn

According to the World Bank’s latest Commodity Markets Outlook, the conflict’s effects on global commodity markets have been limited so far. Overall oil prices have risen about 6 percent since the start of the conflict. (Reuters)
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Updated 19 November 2023

Gaza war a threat to fragile world economy, analysts warn

  • World Bank report forecasts an economic ‘shock’ could push oil prices soaring to $150 per barrel

RIYADH: In a worrying report issued on Oct. 30, the World Bank warned that the war in Gaza between Israel and Hamas could trigger an economic “shock” that would include oil prices soaring up to $150 a barrel and millions around the world going hungry due to the result of higher food prices.

Just as the world economy emerges from the disruption of the pandemic and the shockwaves of the Ukraine war, economists and risk analysts are mindful of how an escalation of the Israel-Hamas conflict into a wider regional war involving Lebanon, Syria, Iraq, and even Iran, might impact the global economic recovery and the price of commodities for rich and poor countries alike.

In its latest Commodity Markets Outlook, the World Bank stresses that while the global economy is in a much better position than it was during the 1970s to “cope” with a major oil-price shock, it did state that “an escalation of the latest conflict in the Middle East – which comes on top of disruptions caused by the Russian invasion of Ukraine – could push global commodity markets into unchartered waters.”

In 1973 members of the Organization of Arab Petroleum Exporting Countries, led by Saudi Arabia’s King Faisal, proclaimed an oil embargo of nations that had supported Israel during the Yom Kippur War. At the time, the embargo acutely strained the US economy, which had grown increasingly dependent on foreign oil under the Nixon Administration.

“At the moment, the situation is fluid,” Dr. Nasser Saidi, former Lebanese economy and trade minister and founder of Nasser Saidi & Associates, an economic and business advisory consultancy, told Arab News, adding: “The impact of the Israel-Hamas war will depend on the length and depth of the conflict as well as if it spills over into the wider region, thus drawing in other parties, resulting in international ramifications that would then have an effect on global supply chains.”

In his presentation “The Middle East in a Fragmented, Multi-Polar World” at the 19th Korea Middle East Cooperation Forum in Doha from Nov. 5-8 this year, Saidi stated how “global growth momentum has already slowed significantly this year; the war has the potential to further slow growth rates, raise already record-high public debt levels into crisis.”

According to the bank’s report, the conflict’s effects on global commodity markets have been limited so far. Overall oil prices have risen about 6 percent since the start of the conflict. Prices of agricultural commodities, most metals, and other commodities have barely budged.

“The global economic impacts of the war between Israel and Hamas have remained relatively muted,” Robert Mogielnicki, senior resident scholar at the Arab Gulf States Institute in Washington, told Arab News. 

The impact of the Israel-Hamas war will depend on the length and depth of the conflict as well as if it spills over into the wider region, thus drawing in other parties, resulting in international ramifications that would then have an effect on global supply chains.

Dr. Nasser Saidi, former Lebanese economy and trade minister and founder of Nasser Saidi & Associates

“Unless we see this conflict ignite the region, there is unlikely to be a major shock to global markets,” he added. “This war of course raises the geopolitical stakes within the region, but in many cases the impact of geopolitical developments on markets tends to be limited and short-lived.”

However, some analysts take a different view, and warn that ongoing fighting between Israel and Hamas could severely threaten the world’s already fragile economic outlook.

The war in Gaza, now in its sixth week, has resulted in the displacement of around 1.5 million Palestinians, 21 hospitals that have gone out of service and dozens more that had been severely damaged, over 11,000 deaths and tens of thousands more injured, according to the Health Ministry in Hamas-run Gaza.

“We are meeting at a very dangerous time for our part of the world,” said Saidi during his presentation in Doha. “The timing of this conference is very opportune at a personal level, and I think it reflects many of us. I have known nothing but war during my own lifetime as a professional, as a minister, as a public official, as an academic. My message is it must end and maybe what is happening today in Gaza and Palestine more generally may be a moment of change. We don’t know yet. We’re still living the fog war.”

As Saidi underlined, the Middle East is home to 60 percent of the world’s refugees – the highest number in the world.

Palestinian refugees won’t just stay in neighboring countries, they will be pushed to move to other regions, including Europe, he added.

“The impact of the war on oil and gas prices could be huge,” said Saidi, further noting that if oil prices jump to a record $150 per barrel as the World Bank warns, “it will affect world economic growth, which has already been slowing during 2023. The more inflation affects commodity prices, the lower economic growth and the increase in debt crises for many countries because you are also having a period of high interest rates.”

“Destruction and violence beget violence,” added Saidi in his presentation. “There are no military solutions in Gaza.”

The countries most vulnerable in the Middle East include Lebanon, Egypt, Jordan and Iran. These countries are already facing a decline in growth, have current account and fiscal deficits and a fall in international reserves. According to Saidi, the sectors that will be most impacted in these countries are tourism, hospitality, construction and real estate, as well as capital outflows and lower foreign direct investment inflows.

“Neighboring Middle Eastern states dealing with significant economic challenges of their own, like Egypt and Lebanon, are especially vulnerable here,” said Mogielnicki. “Any spillover of violence or refugees will immediately impact these neighboring states, which do not necessarily have the absorptive capacity.”

A lot clearly depends on oil.

“Any escalation of violence or major attacks in the oil- and gas-producing countries of the Gulf would affect energy markets in a consequential manner,” said Mogielnicki. “Thus far, key actors in the Gulf have demonstrated a strong desire to prevent this war from turning into a broader regional conflict.”

On Nov. 11, Saudi Arabia called an emergency Arab-Islamic Summit to address concerns over the humanitarian crisis in Gaza. All leaders agreed on the need for a ceasefire. The joint summit concluded by calling for an Israeli arms embargo. 


The World Bank stresses that while the global economy is in a much better position than it was during the 1970s to cope with a major oil-price shock, it did state that an escalation of the latest conflict in the Middle East could push global commodity markets into unchartered waters.

“The world is becoming increasingly fragmented,” said Saidi.

It has also experienced great economic shifts in recent years – shifts that see the global economy looking eastward rather than westward.

In 1993, the G7 countries produced close to 50 percent of the world’s gross domestic product. Today, that group accounts for 30 percent, while Asia, in particular China, produces close to 20 percent.

“The implications for this part of the world are very clear,” said Saidi. “Our economic relations, politics, defense and other ties have always been with the West, but economic geography dictates that we need to shift those relations towards Asia.”

Saidi argued in his presentation that one way to solve some of the dire economic prospects facing the Middle East, especially with the war in Gaza, is the creation of a regional development bank. The focus now needs to be on “post-war stabilization, reconstruction, recovery and a return to pre-war economic legacy.”

“The GCC (Gulf Cooperation Council) have got to be the main engine for economic stability across the Middle East because they’re capable of doing that,” said Saidi. “In order to do so, we must reinvigorate the GCC common market and the GCC customs union. We need trade agreements as a block for the GCC countries. Secondly, we need to establish an Arab bank for reconstruction and development. We are the only region in the world.”

"We are the only region in the world without a development bank," said Saidi.

When asked why the Middle East needs a development bank, Saidi said: "Because many of our countries have been destroyed."

“We need to help rebuild them. The cost is easily $1.4 to $1.6 trillion, and the list of countries is increasing. We now have Gaza and Palestine added to them.”

This, he said, could be one area for cooperation between the Middle East and Asia.

“The big tectonic shift is moving towards Asia,” added Saidi. “All our trade agreements are with Europe and the United States. That must change. We must shift.”

New climate change and governance framework launched by Islamic Development Bank insurance arm at COP28

Updated 12 sec ago

New climate change and governance framework launched by Islamic Development Bank insurance arm at COP28

RIYADH: A new policy on climate change and framework for environmental, social, and corporate governance was launched by the Islamic Corp. for the Insurance of Investment and Export Credit at the UN Climate Change Conference in Dubai. 

The ICIEC, a member of the Islamic Development Bank Group, revealed that the policy aims to integrate governance principles into the institution’s operations, product development, and risk assessment processes, according to the Saudi Press Agency.

The framework also represents a comprehensive tool showcasing the strong commitment of member countries to the principles of environmental, social, and institutional governance. It also includes measures to enhance sustainability across internal operations, resources, and asset utilization.

The event was attended by the President of the IsDB Group, Mohammed Sulaiman Al-Jasser and the director-general of the International Renewable Energy Agency, Francesco La Camera, as reported by SPA.

Furthermore, the framework emphasizes the institution’s commitment to climate change by supporting initiatives to reduce carbon emissions, preserve nature, fulfill obligations under the Paris Agreement, and advocate for investment and trade opportunities. 

These efforts are designed to enhance the ability to adapt to climate change, thereby supporting sustainable economic growth in member countries.

CEO of the ICIEC, Oussama Abdel Rahman Kaissi emphasized stating: “The launch of the climate change policy and the environmental, social, and corporate governance framework reflects the institution’s commitment to sustainability, driving positive change, and contributing to the achievement of global climate goals.”

He added: “It sets new standards for excellence in environmental, social, and corporate governance within the insurance and development sector.”

The ICIEC’s initiative marks a significant step toward aligning financial institutions with global sustainability goals and fostering responsible practices within the sector. 

The organiztion aims to be recognized as the preferred enabler of trade and investment for sustainable economic development in its member countries and to facilitate trade and investment between them and the world through Shariah-compliant risk mitigation tools.

The Islamic Development Bank is a multilateral development bank working to improve lives by promoting social and economic development in member countries and Muslim communities worldwide, delivering impact at scale.

Saudi private sector employment reaches 10.8m

Updated 26 min 23 sec ago

Saudi private sector employment reaches 10.8m

RIYADH: Saudi Arabia’s total number of employees in the private sector reached 10.8 million in November, up 0.93 percent from the previous month, according to newly released figures.

Of those, 2.3 million were Saudi nationals, and 8.5 million were residents of the Kingdom, the Saudi National Labor Observatory report revealed.

Analysis of the Saudi national contingent shows that 40.99 percent were females. In contrast, of the 8.5 million non-Saudi workers, 3.86 percent were females.

This data represents a positive trend as the private sector continues to expand its workforce, creating opportunities for Saudi citizens.

Saudi environment ministry initiates programs to propel agricultural sector growth

Updated 55 min 41 sec ago

Saudi environment ministry initiates programs to propel agricultural sector growth

RIYADH: Several initiatives are underway in Saudi Arabia by the Ministry of Environment, Water, and Agriculture to drive the growth of the agricultural sector and bolster its contribution to the gross domestic product through strategic training and investment incentives. 

Among these efforts are projects aimed at localizing agricultural professions through comprehensive training programs. The focus is on qualifying professionals in various fields, ranging from fishing trades to livestock management, beekeeping, and honey production. 

Additional government support is being extended through a series of legislative decisions, with the objective of enforcing high-quality standards for Saudi products. This is achieved by issuing food quality certificates and expediting the procedures for obtaining agricultural licenses.

The support also encompasses the provision of subsidies and the allocation of soft agricultural loans through the Agricultural Development Fund, the Saudi Press Agency reported. 

The ministry has introduced distinct labels for agricultural products, fish, and livestock in the Kingdom. These labels include “Organic,” “Fish,” “Saudi Dates,” and “Saudi Qab” certification. 

This allows farmers and investors to market and export their products, thereby expanding opportunities in both local and global markets. Simultaneously, it provides a dependable means to ensure quality and safety standards. 

This came during a workshop organized by the ministry, aligning with the Vision 2030 objectives for food security and sustainable agricultural development. The workshop was conducted under the title “Future Prospects for Investment in the Agriculture and Aquaculture Sector.” 

The workshop took place with the attendance of various private sector companies, investors, and experts in the agriculture and aquaculture sectors within the Kingdom, as reported by the SPA. 
Participants in the workshop expressed their consensus that the ministry is actively working toward implementing numerous initiatives and programs.  

These initiatives aim to foster and implement sound agricultural practices, advance applied agricultural research, and fortify frameworks for the sustainable development of food consumption. 

Moreover, the ministry reiterated its commitment to establishing the previously announced Regional Center for Sustainable Development of Marine Fisheries, demonstrating its dedication to supporting the aquaculture industry. 

The measures implemented by the ministry resulted in a substantial boost to the agricultural sector’s contribution to the GDP, reaching approximately SR100 billion ($27 billion) in 2022.  

Concurrently, total food production surged to around 11 million tons, contributing significantly to price stability and elevating self-sufficiency rates for essential goods and products in the Kingdom.

UAE’s non-oil activities steady as PMI hits 57 in November: S&P Global

Updated 06 December 2023

UAE’s non-oil activities steady as PMI hits 57 in November: S&P Global

RIYADH: The growth of non-oil activities in the UAE was steady in November, driven by a sharp rise in new business inflows and efforts to rapidly replenish and build stocks in the face of healthy demand conditions, an economy tracker showed.  

The latest S&P Global Purchasing Managers’ Index report revealed that the UAE’s PMI hit 57 in November, slightly down from 57.7 in October.  

Despite this slight decline, the PMI of the Emirates remained well above the neutral threshold of 50, indicating a continued improvement in business conditions.  

David Owen, senior economist at S&P Global Market Intelligence, said: “The strong run of demand growth in the UAE non-oil economy sparked a rapid increase in input buying during November, as firms looked to ensure they were in a good position to take advantage of growth opportunities.”  

He added: “Indeed, the uplift in buying — the fastest since July 2019 — supported the most rapid build-up of stocks in close to six years, benefiting both local businesses and trade partners.” 

The report revealed that operating conditions for non-oil private firms improved rapidly midway through the final quarter, supported by strong trends for new business, output and inventories.  

S&P Global added that sustained growth in new business also led to an acceleration in purchasing activity in November. 

The report pointed out that overall cost inflation in November remained stronger than recent trends, but selling prices were largely stable.  

On the flip side, some companies that took part in the PMI survey expressed a clear drop in their confidence level about the future due to concerns about competitive pressures.  

Even though the expansion in total sales was one of the fastest seen in close to four-and-a-half years, it slowed markedly from October, as some firms noted greater competitive pressures and a softer rise in new export business.  

“Businesses were much less upbeat about the future path of activity, as some survey panellists reiterated concerns that a large number of firms are entering the market. The build-up of competition was likely a key factor behind stock-building efforts, with businesses wary of falling behind in a fast-growing economy,” explained Owen.  

Saudi Arabia’s real estate supply reservations more than double

Updated 06 December 2023

Saudi Arabia’s real estate supply reservations more than double

RIYADH: Citizens in Saudi Arabia are gaining greater access to residential units as the real estate supply reservations surged 110 percent year on year in November to reach 12,503, according to new figures.    
The Kingdom’s National Housing Co. announced that residential units were sold at competitive prices starting from SR250,000 ($66,649) compared to the previous year’s rates, in which the lowest contract amounted to SR321,000 per residential unit, the Saudi Press Agency reported.
This falls in line with the Gulf country’s plans and strategies to launch several extensive residential projects in order to achieve a balance between population growth and rapid urban expansion.   
This also comes as the rise in population density has led to increased demand for housing, meaning the Kingdom is working to boost the real estate supply to meet this need, aligning with a sustainable urban approach.
This rapid increase in reservations is mainly attributed to the launch of a number of residential projects in various regions, the most prominent of which is the inauguration of the Al-Fursan Suburb in Riyadh which aims to provide the largest real estate supply with a high level of quality and luxury. Other projects include the Sadayem Suburb which was launched in Jeddah along with many housing schemes in distinctive locations within the main cities.
In fact, the number of residential projects reached 46 during 2023, thereby cementing Saudi Arabia’s innovative model for real estate development.
National Housing Co. is the leader and enabler of the real estate development sector and the largest major developer of suburbs and residential communities in the Kingdom characterized by quality of life.  The company pumps more than 300,000 housing units into eight suburbs and six residential communities on an area of more than 120 million sq. meters, accommodating more than 1 million citizens.
It seeks to find solutions to secure supply chains with high quality and more sustainable construction materials, as part of the company’s keenness to increase the real estate supply with residential options according to international standards.
All the firm’s efforts are directed to achieving the goals of the housing program by raising the percentage of residential ownership for Saudi families to 70 percent by 2030.