KABUL: In the wake of the U.S. and Israeli conflict against Iran and the ensuing war in the Middle East, International Monetary Fund officials say the conflict will push inflation higher and slow global economic growth.
Kristalina Georgieva, Managing Director of the IMF, told Reuters in an interview published early Tuesday that the war in the Middle East has produced the largest disruption in the history of energy markets, and that the effective closure of the Strait of Hormuz has halted production of millions of barrels of oil.
Georgieva said that even if the war in the region ends quickly, the IMF will be forced to lower its global growth forecasts and revise its inflation outlook upward. “Right now all paths lead to higher prices and lower economic growth,” she said.
The IMF official added that the conflict has effectively reduced global oil supply by about 13 percent and that its effects have spread through supply chains for oil and gas, helium, and certain chemical products.
IMF remarks on the conflict’s impact on inflation and world growth come ahead of the institution’s World Economic Outlook report, which is scheduled for release in about a week (April 14).
IMF Chief: Middle East war will raise inflation and reduce global growth
