IMF examines global growth forecasts as Middle East war impacts economies – THIS UPDATE

The International Monetary Fund (IMF) is set to cut its global growth forecast, citing the economic fallout from the ongoing conflict in the Middle East, despite a fragile ceasefire.

International Monetary Fund managing director Kristalina Georgieva warned that the “scarring effects” of war will weigh heavily on economies, with rising energy costs, damaged infrastructure and disrupted supply chains undermining prospects for recovery. Even in the fund’s most optimistic scenario, he said, global growth will be lower than previous expectations.

The IMF estimates that demand for balance of payments support could increase by $20 billion to $50 billion in the near term, depending on the duration of the ceasefire. It is also expected to provide up to $50 billion in emergency assistance to the most affected countries, as food insecurity threatens at least 45 million people.

Speaking alongside International Monetary Fund officials at spring meetings in Washington, Ajay Banga, president of the World Bank, said his institution could mobilize $25 billion, with up to $60 billion available over time.

The conflict triggered by the US-Israeli offensive against Iran has disrupted global oil flows, particularly through the Strait of Hormuz, driving up prices and intensifying inflationary pressures. The IMF now plans to revise its global inflation forecast upwards.

Regionally, the World Bank expects growth in the Middle East (excluding Iran) to slow to 1.8% in 2026, a sharp downgrade. Both institutions have launched a joint coordination effort to address energy market disruptions and broader economic risks.

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