IMF: Middle East War Pressures Global Economy, China Calls for Energy Stability

The Chinese government agrees with the International Monetary Fund’s (IMF) report, which states that the conflict in the Middle East is triggering a global economic crisis and threatening energy security. IMF Managing Director Kristalina Georgieva previously said the conflict in the Middle East has caused significant difficulties worldwide.

“The IMF report once again proves that the war not only causes numerous casualties and losses but also severe adverse impacts, hindering global economic growth and improvements in people’s welfare. This is a war that should not have happened,” said spokesperson for China’s Ministry of Foreign Affairs Guo Jiakun during a press conference in Beijing on Wednesday (15/4).

One of the main negative impacts is the shock to global supplies, causing a 13 per cent reduction in oil distribution and 20 per cent in liquefied natural gas (LNG) per day.

“The international community, especially less developed countries, should not have to bear the burden,” Guo Jiakun stressed.

According to Guo Jiakun, the top priority now is to prevent further fighting, resume traffic through the Strait of Hormuz, and restore peace and stability in the Gulf region as soon as possible.

“This needs to be done to prevent a war that has even greater impacts on the global economy and energy security or even a humanitarian crisis,” he added.

The IMF states that supply disruptions are expected to cause refinery shutdowns and trigger fuel and food crises.

“As a reminder, because this is a negative supply shock, demand adjustments are unavoidable,” Georgieva said.

In addition, according to IMF calculations, a 10 per cent increase in oil prices in the long term could raise global inflation by 40 basis points and reduce global output by 0.1 to 0.2 per cent.