The Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, warned that the continued escalation and hostilities in the Middle East could lead to global economic consequences that are much more severe.
At a press conference, cited by Reuters, Georgieva said that “the continuation of the war is making IMF forecasts, which anticipated a slight slowdown in global growth and a modest rise in prices, now unrealistic,” highlighting the rise in inflation and the approach of the $125 per barrel threshold for oil.
She noted that long-term inflation remains stable and that financial conditions are not yet tight, while warning that this stability could be threatened if military operations continue.
She added that the global economy faces gloomier prospects, with regional instability driving up energy costs and worsening inflation.
In April, the IMF published three scenarios for global GDP growth in 2026 and 2027, namely the main “baseline” forecast, a “downside” scenario of intermediate severity, and a much more pessimistic “severe” scenario.
In the downside scenario, global growth would slow to 2.5% in 2026, while inflation would rise to 5.4%. The baseline scenario, which assumes a short-lived conflict, projects growth of 3.1% and inflation of 4.4%.
Despite a fragile ceasefire between Washington and Tehran, tensions rose after Trump’s announcement of the “Freedom Project” operation to reopen navigation in the Strait of Hormuz, amidst military deployments, Iranian warnings, and diplomatic deadlock, as the crisis continued to weigh on global energy markets.
