IMF warns global economy must prepare for unpredictable shocks from war in Iran
Managing Director of International Monetary Fund Kristalina Georgieva (photo: Getty Images)
Prolonged hostilities in the Middle East could affect global markets and economies, creating unexpected challenges for policymakers, said Managing Director of the International Monetary Fund Kristalina Georgieva, Bloomberg reports.
"If the new conflict proves prolonged, it has clear and obvious potential to affect market sentiment, growth, and inflation, placing new demands on policymakers," Georgieva said at a symposium in Tokyo.
She added that consequences may be felt even after the end of hostilities, creating long-term uncertainty.
"In this new global environment, think of the unthinkable and prepare for it," the Managing Director of the International Monetary Fund warned.
Georgieva confirmed that shipping through the Strait of Hormuz has decreased by 90%. About one-fifth of global supplies of oil and liquefied natural gas pass through it, including about half of oil imports in Asia and one-quarter of liquefied natural gas imports.
Against the background of these shocks, the head of the International Monetary Fund called on policymakers to invest in strong institutions and the development of the private sector.
"You have control over your domestic policies. You can get your own house in the best position to face these shocks," Georgieva emphasized.
How the war in Iran affected prices
Due to the blockade of tankers in the Strait of Hormuz, oil prices went up.
On March 2, Qatar stopped production of liquefied natural gas at its largest export facility in the world after an attack by Iranian drones, and against this background, European gas prices jumped by more than 50%, while global energy markets experienced a shock.
Last week increase in fuel prices and the formation of queues at gas stations were already observed. Experts explain this rather as a panic reaction to the news than real supply problems.
Chief Executive Officer of National Joint Stock Company Naftogaz of Ukraine, Sergii Koretskyi, confirmed that fuel prices in Ukraine increased on average by up to 6 hryvnias per liter.
In response, President of Ukraine Volodymyr Zelenskyy assured that fuel shortages are not expected, and state company Ukrnafta will minimize markup on gasoline and diesel to restrain price growth for the population.
In addition, the Antimonopoly Committee asked gas station networks to provide explanations within three days for the rising prices of gasoline, diesel, and liquefied gas.
