The ongoing conflict in the Middle East is anticipated to exacerbate inflation and hinder global economic growth, according to Kristalina Georgieva, the head of the International Monetary Fund (IMF). Her remarks come ahead of the IMF’s upcoming economic forecast, which is set to be released next week.
Georgieva indicated that, in the absence of the conflict, the IMF might have slightly improved its growth projections for the global economy, estimating growth rates of 3.3% in 2026 and 3.2% in 2027. However, she noted that current developments are leading to the opposite outcome.
“If it weren’t for this war, we would have seen a modest increase in our growth forecasts. Instead, all paths are now leading to rising prices and slowing growth,” she explained.
The IMF emphasized that even if hostilities were to cease quickly and recovery efforts were initiated promptly, the repercussions for the global economy would still be negative. This includes a slight reduction in growth forecasts and an increase in inflation expectations.
Georgieva also cautioned that a prolonged conflict would likely intensify these negative effects, resulting in greater price pressures and a deeper slowdown in the global economy.
Additionally, she revealed that the IMF has already received requests for financial assistance from several countries, although she did not specify which nations were involved. Georgieva mentioned that the IMF might expand existing lending programs to address the needs of these countries.
The situation surrounding the Strait of Hormuz is critical not just for the Middle East but for the global economy as well, as a significant portion of the world’s oil supplies transit through this region. The failure to reach agreements for its reopening only heightens the risks of further price surges and continued economic slowdown worldwide.
In a related development, on April 5, U.S. President Donald Trump publicly demanded that Iran reopen the Strait by April 7, threatening to destroy the country’s power plants if they refused. In response, Tehran stated that it would only consider such a move after receiving compensation for damages caused by the conflict.
Kristalina Georgieva of the IMF has warned that the ongoing Middle East conflict is likely to increase inflation and slow global economic growth. The IMF's upcoming forecast will reflect these challenges, highlighting the potential for negative economic impacts even if hostilities cease soon.