WASHINGTON – The head of the International Monetary Fund has cautioned that the ongoing conflict in the Middle East is likely to push global inflation higher while weakening economic growth worldwide.
Speaking ahead of the Fund’s upcoming global outlook, Managing Director Kristalina Georgieva said the crisis has severely disrupted energy supplies, with significant volumes of oil production halted following Iran’s effective closure of the strategically vital Strait of Hormuz — a key route for nearly one-fifth of global oil and gas shipments.
She noted that even if the conflict is resolved quickly, the IMF is expected to lower its global growth projections and raise its inflation forecast. The situation is set to dominate discussions during next week’s Spring Meetings of the IMF and the World Bank in Washington.
The IMF is scheduled to release its updated World Economic Outlook on April 14, outlining multiple economic scenarios. Earlier signals from the Fund indicated a possible downgrade due to the uneven economic shock caused by the conflict, along with tightening financial conditions. Prior to the crisis, global growth was projected at 3.3 percent in 2026 and 3.2 percent in 2027.
Georgieva said the global economy is now facing heightened uncertainty driven by geopolitical tensions, technological changes, climate-related shocks and demographic shifts, warning that these overlapping challenges could prolong instability.
According to the IMF chief, global oil supply has declined sharply, with disruptions extending beyond energy into related sectors such as fertilisers and industrial gases. She added that even a short-lived conflict would leave a negative imprint on the global economy, while a prolonged war would intensify inflationary pressures and further slow growth.
The impact is expected to be particularly severe for low-income, energy-importing countries that lack the financial capacity to shield their populations from rising prices. She warned that such pressures could increase the risk of social unrest in vulnerable regions.
Georgieva revealed that several countries have already approached the IMF for financial assistance, adding that the institution may expand existing lending programmes to address emerging needs. She also advised governments against broad energy subsidies, cautioning that such measures could worsen inflation.
While energy-importing nations are bearing the brunt of the crisis, energy producers have also been affected. Damage to production facilities has disrupted output in some countries, with recovery expected to take several years in certain cases.
Despite the absence of an immediate global food crisis, the IMF has raised concerns over food security, particularly if supply chains for fertilisers are further disrupted. The Fund is coordinating with international agencies to monitor the situation closely.
Georgieva warned that even if hostilities end soon, the economic consequences of the conflict will persist, leaving a lasting impact on global markets and growth.
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