War in Gaza shakes Middle East economies

As Israel’s attacks on Gaza continued, the economies of countries in the region began to shake.

The British newspaper Financial Times published today, under the byline of Simeon Kerr, the news titled “The Gaza conflict is shaking the economies of the Middle East” and included the following statement: “The growing death toll and fear of another war deter tourists and investors.”

Egypt, Jordan and Lebanon, neighbors of the Palestinian territories occupied by Israel, stand out as the countries that have been and will be most affected by the war.

RESERVATION CANCELLATIONS

Noting that these three countries, whose economies are fragile and dependent on tourism, are the first to be affected, the Financial Times emphasized that the economies of other countries in the region may also be negatively affected as the war escalates.

The news quoted a tour operator as saying there were booking cancellations in Jordan, where tourism makes up 10 percent of total national income, and stated that there were many booking cancellations in Egypt, especially in the Sinai on the border with Gaza.

The news, which recalled that Egypt, which was already going through an economic crisis, turned to the IMF, included the opinion of Faruk Suossa, one of the regional economists at Goldman Sachs, one of the main banks in the United States: “We believe that it can There will be a loss of billions of dollars in tourism revenue in Egypt this year alone.

Soussa noted that Egypt does not have foreign exchange reserves that could cover such a loss.

Lebanese Tourism Minister Walid Nassar was quoted in FT news as telling CNN Business Arab that about 40 percent of Lebanon’s national income, which is already in deep crisis, depends on tourism and that they will face a greater deterioration of the economy due to the war.

Speaking at Saudi Arabia’s Future Investment conference last week, IMF President Kristalina Georgieva said: “Uncertainty is killing the flow of tourism.”

THE GULF COUNTRIES ARE ALSO IN TINKS

Concerns are rising in the oil-rich Gulf kingdoms, which have entered the path of normalization with Israel in recent years and where Ankara hopes for investment, although the searing effect of the war has not yet been felt.

United Arab Emirates (UAE) Foreign Minister Noura al-Kaabi, who signed a normalization agreement with Israel in 2020, said yesterday that they were working towards a ceasefire in Gaza and warned that regional temperatures were approaching to the “boiling point”.

The UAE minister noted that the risk of the war turning into a regional war is also a real risk.

Soussa, the Goldman Sachs economist, also said there is great uncertainty about the possible effects of the war on the region’s economies, and that the economic impact may increase as the war grows.

James Reeve, chief economist at Saudi Arabia-based Jadwa Investment, said rising oil prices may boost oil revenues, but foreign direct investment inflows and tourism revenues are likely to decline. Reeve noted that this situation would be a great loss considering the objective of diversifying the economy.

It was also reported in the news that in Dubai, which has seen a tourism and real estate boom recently, there were cancellations of reservations, especially by American and Israeli tourists, due to the Gaza war, but for now the cancellations are expected to be limited compared to Mediterranean countries.