The International Monetary Fund (IMF) has signaled it will downgrade global growth forecasts, citing the far-reaching economic fallout from the ongoing Middle East conflict, even as a fragile ceasefire remains in place.
IMF Managing Director Kristalina Georgieva warned that the war’s “scarring effects” would linger, making a full recovery unlikely in the near term. “Even in a best-case scenario, there will be no neat and clean return to the status quo ante,” she said.
According to Georgieva, rising energy costs, infrastructure destruction, disrupted supply chains, and weakened investor confidence will weigh heavily on global economic performance.
Even under the fund’s most optimistic outlook, growth is expected to fall short of earlier projections.
The IMF estimates that between $20 billion and $50 billion in balance-of-payments support may be needed in the short term for countries affected by the crisis, with total emergency assistance potentially reaching $50 billion. Food insecurity is also expected to worsen, impacting at least 45 million people.
Georgieva spoke at the opening of the IMF-World Bank Spring Meetings in Washington, where global economic leaders are gathering to assess the fallout from the conflict.
Meanwhile, World Bank President Ajay Banga said the institution is prepared to mobilize up to $25 billion quickly for affected developing countries, with as much as $60 billion available over the longer term if needed.
The war triggered by the US-Israel offensive against Iran on February 28 has disrupted global trade routes and driven up oil prices, particularly after Tehran effectively blocked the Strait of Hormuz, a critical artery for global energy supplies.
Although a ceasefire has been announced, tensions remain high, with both sides accusing each other of violations. Talks aimed at securing a more durable peace are expected to continue.
Georgieva emphasized that the crisis is hitting poorer nations hardest, especially low-income countries that rely heavily on energy imports. She highlighted the vulnerability of remote economies, including Pacific Island nations, facing the risk of fuel shortages due to supply disruptions.
The IMF also plans to revise global inflation forecasts upward, driven by surging oil prices and continued supply chain bottlenecks.
In a related assessment, the World Bank warned that the Middle East is already experiencing a “serious and immediate economic toll.” Excluding Iran, regional growth is projected to slow to 1.8 percent in 2026—a sharp downgrade from pre-war expectations.
A joint meeting involving the IMF, World Bank, and the World Food Programme underscored the growing risk to global food security. A statement from the meeting warned that higher oil, gas, and fertilizer prices, coupled with transportation disruptions, would inevitably drive up food costs.
To address the crisis, the IMF and World Bank have established a coordination group focused on stabilizing energy markets, with high-level discussions scheduled to continue.
In its latest analysis, the IMF noted that countries directly involved in conflict typically see economic output fall by about three percent at the onset, with declines persisting for years. The fund reiterated that the ongoing crisis is likely to lead to higher prices and slower global growth, with low-income countries facing the greatest risk and requiring increased international support.
