Warning from the IMF: 'Even if the war ends, the impact will last for years'

'ECONOMIC GROWTH UNDER THREAT'

International Monetary Fund (IMF) Managing Director Kristalina Georgieva emphasized that the negative impacts of the ongoing conflicts in the Middle East on the world economy are steadily increasing. Speaking to Reuters on Monday, ahead of the upcoming IMF-World Bank Spring Meetings, Georgieva stated that global economic growth is under threat.

The root of the severe volatility in global energy markets lies in the de facto closure by Iran of the Strait of Hormuz, through which a large portion of the region's oil and gas shipments pass. This development has caused millions of barrels of oil to be withdrawn from the market, leading to disruptions in global energy supply.

With her comment that "all roads lead to higher prices," Georgieva pointed to the pressure that volatility in energy markets is placing on both growth and inflation.

'THE REAL RISK IS FOR POOR COUNTRIES'

The IMF Managing Director stated that even if a quick solution is found to mitigate the impact of the conflict, the institution will lower its growth projections. Re-evaluating the global growth forecasts of 3.3% for 2026 and 3.2% for 2027 is on the agenda. Downward revisions are expected in the World Economic Outlook report to be published on April 14.

Noting that the war has led to a 13% loss in energy supply, Georgieva explained that in addition to rising oil prices, there have been serious disruptions in helium and fertilizer supply chains. According to information obtained from the International Energy Agency, 72 energy facilities in the region have suffered varying levels of damage; one-third of these have sustained serious damage. It is estimated that the recovery of natural gas production in Qatar could take years.

It is stated that the greatest damage will be felt by low-income, poor countries with limited access to energy resources. Georgieva noted that these countries are in a difficult financial position and that rising prices could increase the risk of social unrest. Since 85% of IMF member states are energy importers, governments are advised to avoid large-scale energy subsidies.

'MILLIONS OF PEOPLE FACE FOOD INSECURITY'

The fact that Brent crude oil prices reached the $110 level due to tensions in the Strait of Hormuz has also brought concerns about food security. Georgieva noted that while a global food crisis is not expected at this time, problems with fertilizer shipments could worsen the situation. According to a warning issued by the World Food Programme, it was reported that if the conflict extends into the summer months, millions of people could face severe food insecurity.

Kristalina Georgieva concluded her statement by saying, "Even if the war were to end today, the negative consequences for the global economy will be felt for many years to come."