IMF outlook worsens for a ‘limping’ world economy. Mideast war poses new uncertainty. The world economy has lost momentum from the impact of higher interest rates, the invasion of Ukraine and widening geopolitical rifts, and it now faces new uncertainty from the war between Israel and Hamas militants, International Monetary Fund warned. (AP)

Sri Lanka crisis: Colombo reaches debt deal with China. Sri Lanka has confirmed that it has reached a deal with China, to restructure $4.2bn (£3.4bn) of debt. (BBC)

How global firms are reacting to the Israel-Hamas conflict. Companies ranging from airlines to banks have shut operations in Israel, asking their employees to work from home. (Al Jazeera)

Japan must focus on wage growth ahead of inflation, says BOJ's Noguchi. Japan must focus on improving wage growth to pave the way for sustainable inflation, Bank of Japan board member Asahi Noguchi said, signaling that the central bank must retain its monetary easing policy for the time being. (Reuters)

Bank of Israel to sell $30bn of forex after shekel falls. The Bank of Israel says it will sell up to $30bn of foreign currency in the open market to maintain stability of the shekel during Israel’s war with Hamas in the Gaza Strip. (Al Jazeera)

India’s Bank of Baroda expose worsens: Agents steal money from accounts. India’s Bank of Baroda made it simple and easy for its agents to steal money from the accounts of its customers. And some of them did steal 2.2 million rupees ($27,000) from 362 customers, internal audit reports and records of the bank have revealed. (Al Jazeera)

JPMorgan profit jumps 35%, but CEO says geopolitics and gov’t inaction have led to dangerous time. JPMorgan Chase’s third-quarter profit soared 35% from last year, fueled by a rapid rise in interest rates, but the bank’s CEO, Jamie Dimon, issued a sobering statement about the current state of world affairs and economic instability. (AP)

EU warns China that European public could turn more protectionist if trade deficit isn’t reduced. The European Union’s top foreign policy official warned Friday that public sentiment in Europe could turn more protectionist if the region’s trade deficit with China is not reduced. (AP)

Egypt says Israel seeks to empty Gaza, rejects corridors for civilians. Cairo says it will allow aid to be delivered through its border to Gaza after closing it to civilians fleeing the war. (Al Jazeera)

Japan central banker sees no pressing need to alter yield control policy. There is no pressing need for the Bank of Japan to alter its yield control settings as it has room left for maneuver before the 10-year bond yield hits its ceiling, a central bank board member said, brushing aside market speculation. (Reuters)

Will global oil prices keep rising due to the Israel-Hamas war? Analysts see limited effect on prices in short term as neither Israel nor Gaza are significant producers. (Al Jazeera)

Europe must succeed in restoring price stability. So far so good. These words are probably a fair assessment of Europe’s progress thus far in its struggle against inflation. (IMF Blog)

Israel-Gaza conflict: how could it change the Middle East’s political landscape? Expert Q&A. The surprise attack by Hamas launched on Israel on October 7 has already led to thousands of deaths in both Israel and Gaza, and sparked concerns that the conflict could escalate across the Middle East. (The Conversation)

The world’s dollar addiction is hard to kick. Though the share of global foreign-exchange reserves in U.S. dollars remains near a 25-year low, there is little sign of rapid de-dollarization. (WSJ)

How the UAW strike is impacting supplier operations. The ongoing strike is causing some down-tier suppliers to hold inventory, while others may see cash flow delays. (Supply Chain Dive)

Big-company bankruptcies hang over economy. Businesses that loaded up on debt when interest rates were lower now face growing risk of failure. (WSJ)

Israel-Hamas War Could Have Far-Reaching Economic Impact

Kendall Payton

Israel has officially declared war on the Gaza Strip after surprise attacks by the armed Palestinian group, Hamas, this past week. The death toll has topped 2,800 in Israel and Gaza, with thousands of others injured, in the region’s worst fighting in 50 years.  

Not only does this war impose a humanitarian crisis, but also a strain on Israel’s economy. More than 300,000 working class Israeli’s are now out of work fighting for their country, according to CNBC. “The impact is substantial,” said Eyal Winter, a professor of economics at Hebrew University in Jerusalem. “In a case like this, tourism dries up immediately … but confidence is high that in the end we’ll have a military victory, even as it’s likely we’ll suffer terrible losses.”

Major stock indexes have dropped more than 6% and bank and insurance stocks suffered losses of around 9% after the Hamas attacks. Some economists warn this war may have more of an impact on the local financial market than those in previous years because the financial markets are a main source of the Israeli economy.

Though the amount of economic damage depends on how long workers are away from their jobs, economic activity has the potential to increase after the war ends. “There will be a temporary hit for the startup industry but when the soldiers return so will investment and demand,” Winter said.

The war also could cause oil prices to spike across the globe. “The global Brent oil benchmark rose nearly 5% in trading on Monday, reversing some of a major decline in recent weeks that had cheered many market onlookers and car drivers,” reads an article from ABC News. “The price of crude oil holds major implications for the economy and consumers through its direct effect on costs as an input into products ranging from gasoline to plastics.”

The expected damage to the economy comes from two main factors. “First, it is likely that the war in Gaza will last for a long time, a period in which it can also be assumed that a significant part of Israel will continue to be under missile threat,” Ori Greenfeld, chief strategist at Psagot Investment House told The Times of Israel. “Such a threat will cause the Israeli consumers to go out less and naturally cut consumption. Beyond that, in a period of such heavy uncertainty, it is likely that the volume of investments in the economy, both of the private and public sectors, will also decrease.”

Other countries are also watching the war closely, such as Taiwan, who faces a campaign of intimidation and threats by China similar to the Hamas-Israel war. China claims Taiwan as part of their territory and has conducted several military drills around Taiwan’s air and nearby waters as tensions continue to build between the two countries and the U.S. Taiwan expressed their support for Israel as more than 2,400 Israelis and Palestinians have been killed in the Middle East since the Hamas attack. Taiwanese Defense Minister Chiu Kuo-cheng said the country has “established a working group to study and reinforce the importance of collecting intelligence,” per AP News. “With intelligence, many countermeasures can be made. A war can even be avoided.”

Week in Review Editorial Team:

Annacaroline Caruso, editor in chief

Jamilex Gotay, editorial associate

Kendall Payton, editorial associate