The ongoing war in the Middle East is expected to lead to higher inflation and slower global economic growth, according to the head of the International Monetary Fund.
Speaking to Reuters ahead of the IMF’s upcoming global economic forecast, Kristalina Georgieva said the conflict has already caused severe disruptions in global energy supplies.
She noted that millions of barrels of oil production have been affected due to restrictions around the Strait of Hormuz, a key route for a significant portion of the world’s oil and gas shipments.
Georgieva added that even if the conflict ends quickly, the IMF is likely to lower its growth forecasts and raise its inflation outlook. She said the war will be a major topic of discussion at the upcoming spring meetings of the IMF and the World Bank in Washington.
The IMF is expected to release updated global economic projections in its World Economic Outlook on April 14, reflecting the impact of the war and tighter financial conditions.
Georgieva warned that the world is facing elevated uncertainty due to geopolitical tensions, climate shocks, technological changes, and demographic shifts, urging countries to remain prepared for future shocks.
She also highlighted that the war has reduced global oil supply and affected related industries, including gas, helium, and fertilizers, further straining supply chains.
Poor and vulnerable countries are expected to be hit the hardest, as many lack the financial resources to cope with rising energy prices, increasing the risk of social unrest.
Georgieva also emphasized that broad energy subsidies are not a sustainable solution, and urged governments to avoid policies that could worsen inflation.
Additionally, the conflict has raised concerns about food security, as disruptions in fertilizer and food supply chains could eventually lead to shortages if the situation continues.
