The Israeli-Palestinian war has already claimed the lives of more than 1,500 people and more than 6,000 have been injured on both sides as the conflict entered its fourth day today. According to the New York Times, the Israeli military said more than 900 people have died in Israel since Saturday’s incursion and at least 687 Palestinians were killed, the authorities in Gaza said.

The new war in the Middle East has threatened to upend a world economy that was already reeling from multiple overlapping conflicts, complicating efforts to contain inflation, according to the New York Times.

Below are some of the effects the conflict is having on the economy.

International Monetary Fund expects global economic growth to slow in 2024
The world economy is losing momentum after the start of the Israeli-Palestinian War. The Associated Press reported that the International Monetary Fund expects global economic growth to slow to 2.9% in 2024, down slightly from the 3% it predicted in July.

A series of recent shocks, including the COVID-19 pandemic and the war in Ukraine, has sunk worldwide economic output by about $3.7 trillion over the past three years compared with pre-COVID trends.

Fertilizer stocks increase with Israeli-Palestinian war raising supply concerns
Bloomberg reported that fertilizer makers are seeing a surge in their stock prices, as Hamas’ attack on Israel spurred concerns over global nutrient supplies that are essential for food crops. The Port of Ashdod, just north of Gaza and a critical export center for the country’s potash fertilizer exports, is now in a state of emergency. Ben Isaacson, a Scotiabank analyst, said that is putting as much as 3% of the global potash supply at possible risk.

Isaacson also said that if Iran, a critical nitrogen exporter in the region, gets involved in the conflict, the prices of the nutrient needed for grain production could spike due to limited supply and potential premiums in benchmark Dutch TTF natural gas, which is used to make nitrogen-based fertilizers. Global fertilizer prices had been on a downward trajectory in 2023 before the new war started after surging in 2022 due to supply disruptions from the war in Ukraine. The Israeli-Palestinian war, coupled with Iran’s potential involvement and its impact on the Strait of Hormuz shipping route, could reverse the downward trend.

Another spike in oil prices could pressure the Fed to raise interest rates again
Oil markets are already jittery, and Lucrezia Reichlin, a professor at the London Business School, is concerned that another big increase in oil prices would pressure the Federal Reserve and other central banks to further push up interest rates, according to the New York Times.

Pierre-Olivier Gourinchas, the International Monetary Fund’s chief economist, said it’s too early to assess whether the recent jump in oil prices would be sustained. If they were, he said, research shows that a 10% increase in oil prices would weigh down the global economy, reducing output by 0.15% and increasing inflation by 0.4% next year.