IMF warns Middle East war to slow growth, raise inflation

The head of the International Monetary Fund has warned that the ongoing Middle East conflict will push global inflation higher and slow economic growth, as disruptions in energy supply ripple across the world economy.

Speaking ahead of the IMF’s upcoming outlook report, Managing Director Kristalina Georgieva said the war has caused unprecedented disruption to global energy markets. The crisis has significantly affected the Strait of Hormuz, a critical corridor through which nearly one-fifth of the world’s oil and gas supplies pass.

According to Georgieva, global oil supply has already shrunk by around 13 percent due to the conflict, with knock-on effects extending to supply chains, including fertilisers and industrial gases. Even if hostilities end soon, the IMF is expected to revise down its global growth projections while raising inflation forecasts in its World Economic Outlook due on April 14.

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The conflict is also expected to dominate discussions at the IMF and World Bank spring meetings in Washington, DC next week. Officials will assess the economic fallout and consider policy responses amid rising uncertainty.

Georgieva highlighted that poorer, energy-importing nations will be hardest hit, as many lack the financial capacity to shield their populations from rising fuel and food costs. She cautioned against broad energy subsidies, warning they could worsen inflationary pressures.

The war has also raised concerns about food security. The World Food Programme has warned that millions could face acute hunger if disruptions persist, particularly if fertiliser supplies are affected.

While the IMF does not yet see a full-scale food crisis, Georgieva stressed that prolonged conflict could deepen economic instability worldwide, leaving lasting consequences even after the fighting subsides.