IMF Chief: 10% Oil Rise Could Push Inflation Up 40 Basis Points

Jakarta — The International Monetary Fund’s Managing Director Kristalina Georgieva has warned of global inflation risks stemming from Middle Eastern conflict.

She stated that a 10% increase in oil prices, if sustained throughout most of the year, would result in global inflation rising by 40 basis points. According to OECD data, global inflation remained stable at 3.7% in December 2025. She also estimated that the conflict could dampen economic growth by 0.1%-0.2%.

“We see resilience being tested again by a new conflict in the Middle East,” Georgieva said at a symposium hosted by Japan’s Ministry of Finance, citing Arab News and Business Review on Wednesday, 12 March 2026.

“My advice to policymakers in this new global environment is to think the unthinkable and prepare for it,” she added.

Georgieva noted that the IMF is assessing the potential impact of the conflict on member countries after major oil and gas facilities were affected and traffic through the Strait of Hormuz was reported to have declined by as much as 90%.

Even if the conflict ends, Georgieva is confident that additional shocks will occur. She acknowledged that during her tenure, she has witnessed major crises including the COVID-19 pandemic and Russia’s invasion of Ukraine.

“We are in a world that is more vulnerable to shocks. We are in a world that faces increasing uncertainty. This has now become the new normal,” she said, urging authorities “to think about unthinkable things and prepare,” she added.

The IMF is monitoring the Middle Eastern conflict closely and will incorporate its conclusions in the World Economic Outlook report to be released in April.

In January, the IMF revised its global growth forecast. The IMF projects global economic expansion of 3.3% for 2026 and 3.2% for the following year.