IMF to cut global growth forecast due to Mideast war
The International Monetary Fund will lower global growth forecasts due to the Middle East war, its chief said Thursday, warning of the conflict’s “scarring effects” despite a fragile ceasefire.
“Even in a best case, there will be no neat and clean return to the status quo ante,” IMF managing director Kristalina Georgieva said.
Georgieva said that — even in the fund’s “most hopeful scenario” — spiraling energy costs, infrastructure damage, supply disruptions and a loss of market confidence meant growth would be less than expected.
The IMF also anticipates having to provide up to $50 billion in immediate financial assistance to countries affected by the war, with food insecurity set to affect at least 45 million people.
“Given the spillovers from the war, we expect near-term demand for IMF balance-of-payments support to rise by somewhere between $20 billion and $50 billion, with the lower bound prevailing if ceasefire holds,” Georgieva said.
The IMF chief was kicking off the annual Spring Meetings co-hosted by the International Monetary Fund and the World Bank in Washington, which bring together top economic policymakers from around the world.
Speaking on Bloomberg TV on Thursday, World Bank President Ajay Banga said his institution could put up as much as $25 billion “very quickly” in financing to developing countries affected by the war.
He said as much as $60 billion may be made available over the longer term, if countries need it.
The US-Israel war on Iran, launched on February 28, has engulfed the Middle East in violence, snarled supply chains and sent oil prices surging after Tehran virtually blocked the Strait of Hormuz.
Tehran and Washington have traded accusations of violations of the ceasefire terms, with talks aimed at a more durable peace slated for Saturday.
Georgieva highlighted the “asymmetric” effects of the crisis, hitting low-income energy importers much harder than others.
“Spare a thought for the Pacific Island nations at the end of a long supply chain, wondering if fuel still reaches them in the wake of such a severe disruption,” she said.
