IMF Chief Warns Middle East War Will Drive Inflation Higher and Slow Global Growth

The head of the International Monetary Fund (IMF), Kristalina Georgieva, has warned that the ongoing war in the Middle East is expected to push inflation higher while simultaneously slowing global economic growth, according to remarks given in an interview with Reuters.

She said the conflict has already triggered a major disruption in global energy flows, including a significant reduction in oil supplies following constraints on transport routes such as the Strait of Hormuz, through which a substantial share of the world’s oil and gas passes. The IMF estimates that millions of barrels of production have been affected, with global oil availability reduced by around 13 percent.

Georgieva noted that even in the event of a rapid de-escalation, the IMF is preparing downward revisions to its growth forecasts and upward adjustments to inflation projections. The institution is expected to present a range of scenarios in its upcoming World Economic Outlook report, scheduled for April 14, ahead of the IMF and World Bank spring meetings in Washington.

Under baseline expectations without the conflict, global growth was projected to reach 3.3 percent in 2026 and 3.2 percent in 2027, supported by gradual post-pandemic stabilization. However, Georgieva stressed that current conditions have altered this trajectory, stating that “all paths now lead to higher prices and slower growth.”

She also highlighted the broader context of global instability, citing geopolitical tensions, climate-related shocks, technological shifts, and demographic pressures as additional factors shaping the economic outlook. According to her, the world is entering a period where successive shocks must be anticipated.

The impact of the war is uneven across countries. Economies reliant on energy imports are particularly exposed, while even some producers are experiencing indirect consequences from damaged infrastructure and supply chain disruptions. The IMF chief warned that poorer nations are especially vulnerable due to limited fiscal capacity to absorb rising energy costs, increasing the risk of social and economic instability.

Georgieva added that several countries have already sought financial assistance, without specifying which ones, and indicated that the IMF may expand lending mechanisms if necessary. Around 85 percent of member states are net energy importers, making them sensitive to price fluctuations.

She also cautioned against broad energy subsidy schemes, arguing they could intensify inflationary pressures rather than ease them.

Additional data cited in her remarks pointed to extensive damage across energy infrastructure, with reports from the International Energy Agency indicating that dozens of facilities have been affected, many severely. The situation in key producing countries has also been disrupted, with long-term recovery timelines for parts of production capacity extending over several years.