IMF warns of impact of Middle East war on global economy

New York City (ANTARA) - The International Monetary Fund’s (IMF) Managing Director Kristalina Georgieva warned on Monday (4/5) that the global economy would face “far worse impacts” if the war in the Middle East drags on until 2027 with oil prices reaching around $125 US (US$1 = Rp17,368) per barrel. “We would see inflation rising, and then, inevitably, inflation expectations would start to become unanchored,” she said during a conference organised by the Milken Institute in Washington DC, United States (US). Georgieva stated that under current conditions, including prolonged conflict, oil prices sustained at or above $100 US per barrel, and rising inflationary pressures, the IMF’s “downside scenario” has been triggered. In April, the IMF released three scenarios for global gross domestic product (GDP) growth in 2026 and 2027: the main “baseline projection,” the medium-level “downside scenario,” and a “severe scenario” that is far worse. 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 conflict, projects growth of 3.1% and inflation of 4.4%. “As the days pass, this scenario is becoming further and further from reality,” Georgieva said. For the severe scenario projection, global growth is estimated to reach only 2%, with inflation touching 5.8%.