IMF Cuts Global Growth Forecast Due to Middle East War

The International Monetary Fund is set to lower its global growth forecasts in response to the ongoing Middle East conflict, IMF Managing Director Kristalina Georgieva warned on Thursday. Speaking at the opening of the IMF-World Bank Spring Meetings in Washington, Georgieva said the war’s “scarring effects” would persist even if a fragile ceasefire holds.

“Even in the best-case scenario, there will be no neat and clean return to the status quo ante,” Georgieva said, noting that energy costs, infrastructure damage, supply disruptions, and loss of market confidence would all weigh on global economic growth.

The IMF anticipates providing up to $50 billion in immediate financial assistance to countries affected by the conflict, with food insecurity projected to impact at least 45 million people. Georgieva said demand for IMF balance-of-payments support could rise between $20 billion and $50 billion, depending on whether the ceasefire remains intact.

The conflict, sparked by the US-Israel offensive against Iran launched on February 28, has engulfed the region in violence, disrupted supply chains, and driven oil prices higher after Tehran effectively blocked the Strait of Hormuz. Tehran and Washington have accused each other of violating ceasefire terms, with further peace talks scheduled for Saturday.

The IMF highlighted the “asymmetric” impact of the crisis, with low-income energy importers bearing the brunt. “Spare a thought for the Pacific Island nations at the end of a long supply chain, wondering if fuel still reaches them in the wake of such a severe disruption,” Georgieva said.

On Wednesday, the World Bank reported that the Middle East — excluding Iran — would see economic growth slow to just 1.8% in 2026, a downgrade of 2.4 percentage points from pre-war forecasts. The IMF also expects to revise global inflation upwards due to oil price and supply chain shocks.

A joint statement from the IMF, World Bank, and World Food Programme warned that sharp increases in oil, gas, and fertiliser prices, coupled with transport bottlenecks, would inevitably drive up food prices and deepen food insecurity.

The IMF and World Bank have established a coordination group to address energy market impacts, with a high-level meeting set for Monday. The IMF’s annual Fiscal Monitor report, due for release during the meetings, is expected to highlight rising government debt as countries grapple with repeated economic shocks.

An IMF report on the economic costs of war estimates that output in conflict zones drops by 3% at the outset and continues falling for years. A separate analysis warned that all roads from the Iran war lead to higher prices and slower growth, with low-income countries especially vulnerable to food insecurity amid declining external support.

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