The International Monetary Fund (IMF) has warned that the war in the Middle East will slow global growth and strain economies worldwide, as disruptions to energy supplies ripple through inflation, trade and financial markets.
Managing Director Kristalina Georgieva said the conflict has triggered a “large, global, and asymmetric” supply shock ahead of the IMF-World Bank Spring Meetings in Washington, with oil and gas flows sharply reduced.
“It is large because the world’s daily oil flow cut by some 13 %, and its LNG flow by some 20 %, It is global because all of us now paying more for energy and with supply chains disrupted across the world; And it is asymmetric because its impact depends on proximity to the conflict, whether you are an energy exporter or importer, and your policy space.”
Energy prices surged in the early stages of the conflict, with Brent crude rising from $72 a barrel to as high as $120, before easing but remaining elevated. The shock has already disrupted refining operations, fuel supply chains and transportation networks globally. The IMF said the fallout extends beyond energy markets, warning of rising food insecurity and broader industrial disruptions.
“Food insecurity for another 45 million people given the transport issues, taking the total number of people in hunger to over 360 million, with the problem potentially worsening over time because of higher fertilizer prices.”
Supply chain constraints are also affecting key industrial inputs, including materials used in semiconductors and medical equipment, underscoring the breadth of the shock across sectors. Georgieva said the impact will be transmitted through higher prices, shifting inflation expectations and tighter financial conditions, raising risks for both advanced and emerging economies.
“We have been here before in the 1970s and earlier this decade. We know eventually a significant part of the shock will dissipate, leaving us in a new equilibrium.” Still, the IMF expects global growth to be downgraded even under its most optimistic scenario, reversing earlier expectations of stronger expansion driven by technology investment and supportive financial conditions.
“In fact, had it not been for this shock, we would have been upgrading global growth. But now, even our most hopeful scenario involves a growth downgrade.” The extent of the slowdown will depend on whether a ceasefire holds and how quickly energy infrastructure recovers, with major facilities in the Gulf region facing prolonged disruptions.
Countries that rely on imported energy are expected to bear the brunt of the shock, particularly in regions such as Sub-Saharan Africa and small island states, where fiscal space is limited. Georgieva urged policymakers to avoid measures that could worsen global conditions.
“So here I appeal to all countries to reject go-it-alone actions, export controls, price controls, and so on, that can further upset global conditions: don’t pour gasoline on the fire.”
Central banks should remain vigilant on inflation while fiscal authorities provide targeted support to vulnerable households, she said, warning against broad subsidies or deficit-financed stimulus that could undermine stability.
The IMF also signaled rising demand for financial support, estimating that balance-of-payments needs linked to the shock could reach between $20 billion and $50 billion in the near term.
“Given the spillovers of the Middle East war, we expect near-term demand for IMF balance-of-payments support to rise and to range from $20 billion to $50 billion, with the lower bound prevailing if the ceasefire holds.”
Despite the risks, Georgieva said the Fund remains equipped to respond, stressing that strong domestic policies remain the first line of defense against global shocks. “Take heed: the strength and agility of your fundamentals is your best defense when shocks come, and come they will.”
