Iran war threat: IMF sees inflation rising and economies slowing
Managing Director of the International Monetary Fund Kristalina Georgieva (Photo: Getty Images)
International Monetary Fund Managing Director Kristalina Georgieva stated that the war in the Middle East will lead to rising inflation and slower global economic growth, according to Reuters.
Georgieva made her assessment ahead of the release of a new global economic forecast, which the fund plans to present next week.
According to Georgieva, without the war, the IMF could have even slightly improved its global growth forecasts to 3.3% in 2026 and 3.2% in 2027. However, as the fund's head noted, the situation is now moving in the opposite direction.
"If it weren't for this war, we would have seen a slight upward revision to our growth forecasts. Instead, all paths now lead to higher prices and slower growth," she explained.
The IMF emphasized that even in the event of a swift cessation of hostilities and a rapid recovery, the consequences for the global economy would remain negative. This includes, in particular, a moderate downward revision of the economic growth forecast and an upward revision of the inflation forecast.
At the same time, Georgieva warned that if the war drags on, the negative effect will be stronger. According to her, this would mean even greater pressure on prices and a deeper slowdown in the global economy.
Furthermore, the IMF chief reported that the fund has already received requests for financial assistance from some countries, but did not specify which ones. She added that the IMF could expand certain existing credit programs to cover the needs of these countries.
The situation around the Strait of Hormuz matters not only for the Middle East but also for the global economy, as a significant portion of global oil supplies passes through it. Therefore, the failure of attempts to negotiate its unblocking only increases the risks of a new price spike and further global slowdown.
On April 5, US President Donald Trump publicly demanded that Iran open the strait by the evening of April 7, threatening otherwise to destroy all of the country's power plants. Tehran responded the same day that it was ready to take such a step only after receiving compensation for the damage caused by the war.
