IMF Warns Iran Conflict Threatens Global Growth
The International Monetary Fund (IMF) has warned that escalating disruptions from the ongoing Iran conflict are pushing the global economy closer to an adverse scenario of weaker growth, higher inflation and tighter financial conditions.
According to AFP, the IMF said prolonged geopolitical tensions and disruptions to global energy supplies could significantly weaken the world economic outlook. In its latest World Economic Outlook released last month, the IMF projected global growth of 3.1 per cent for 2026 under its baseline scenario. However, under an adverse scenario involving sustained high oil prices and worsening financial conditions, global growth could slow to 2.5 per cent.
Speaking in Washington, IMF chief spokesperson Julie Kozack said the global economy is gradually moving towards the adverse scenario, although inflation expectations remain relatively stable and financial conditions are still accommodative.
The IMF has also outlined a more severe risk scenario in which global growth could fall to 2 percent while inflation rises to 6 percent. An updated World Economic Outlook is expected to be released in July.
The conflict involving the US, Israel and Iran has intensified tensions across the Middle East, disrupting trade and shipping movements through the Strait of Hormuz — a critical route that handles nearly one-fifth of global oil and gas supplies. The disruption has triggered a sharp rise in global energy prices and increased concerns over broader economic stability.
Kozack said the IMF is engaged in active discussions with several member countries seeking policy and financial support amid the crisis. During the IMF spring meetings last month, Managing Director Kristalina Georgieva had indicated that nearly 12 countries may require IMF assistance, with estimated financing needs ranging between US$ 20 billion and US$ 50 billion.
The IMF also raised concerns over global food security, warning that disruptions in fertiliser supplies due to the conflict could eventually lead to higher food prices and lower agricultural yields. Kozack noted that increases in fertiliser costs historically take around six months to translate into food inflation and food security challenges.
