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The International Monetary Fund will downgrade its global growth forecasts due to the ongoing Middle East conflict, its chief warned on Thursday, highlighting the “scarring effects” despite a fragile ceasefire.
“Even in a best case, there will be no neat and clean return to the status quo ante,” IMF Managing Director Kristalina Georgieva said.
She noted that even under the fund’s “most hopeful scenario,” rising energy costs, infrastructure damage, supply chain disruptions, and a loss of market confidence would result in slower growth than previously expected.
The IMF also anticipates providing up to $50 billion in immediate financial assistance to nations affected by the war, with food insecurity projected to impact at least 45 million people.
“Given the spillovers from the war, we expect near-term demand for IMF balance-of-payments support to rise by somewhere between $20 billion and $50 billion, with the lower bound prevailing if a ceasefire holds,” Georgieva said.
The remarks came at the start of the annual Spring Meetings co-hosted by the IMF and the World Bank in Washington, which gather top economic policymakers from across the globe.
The US-Israel conflict with Iran, launched on 28 February, has engulfed the Middle East in violence, disrupted supply chains, and caused oil prices to surge after Tehran effectively blocked the Strait of Hormuz.
Both Tehran and Washington have accused each other of ceasefire violations, with talks aimed at a more durable peace scheduled for Saturday.
Georgieva emphasised the “asymmetric” nature of the crisis, with low-income energy importers being hit much harder than others.
“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,” she said.
Global Inflation Concerns
On Wednesday, the World Bank reported that the Middle East, which has seen retaliatory Iranian strikes across the Gulf and Israeli attacks in Lebanon, is experiencing “a serious and immediate economic toll” from the war.
Excluding Iran, regional growth is now expected to slow to 1.8 per cent in 2026, a downgrade of 2.4 percentage points from pre-war projections, the bank said.
The IMF is also expected to revise global headline inflation upwards due to rising oil prices and supply chain shocks linked to the conflict.
Earlier this week, heads of the IMF, World Bank, and World Food Programme met in Washington to discuss economic and food security impacts.
“Sharp increases in oil, gas, and fertiliser prices, together with transport bottlenecks, will inevitably lead to rising food prices and food insecurity,” the joint statement read.
The IMF and World Bank have formed a coordination group to tackle energy market impacts, with a top-level meeting scheduled for Monday.
The IMF is also set to release its annual Fiscal Monitor report, expected to flag rising government debt as countries respond to repeated economic shocks.
A recent IMF report highlighted the economic costs of war, estimating that output in countries experiencing fighting drops by 3 per cent at the outset and continues declining for years.
An earlier report on the Iran conflict noted that “all roads lead to higher prices and slower growth” and emphasised the effect of disrupted fertiliser supply chains on food security.
“Low-income countries are especially at risk of food insecurity; some may need more external support — even as such assistance has been declining,” the report added.
