IMF warns of global shock if Middle East war escalates

International Monetary Fund (IMF) Managing Director Kristalina Georgieva warned on Monday that the global economy could face a “much worse outcome” if the Middle East conflict continues into 2027, particularly if oil prices rise to around $125 per barrel.

Speaking at a conference hosted by the Milken Institute in Washington, D.C., Georgieva said prolonged conflict combined with elevated oil prices and rising inflation would intensify global economic risks, News.Az reports, citing Xinhua.

“We are going to see inflation climbing up, and then inevitably, inflation expectations would start de-anchoring,” she said.

She noted that current conditions—including an extended conflict, oil prices remaining at or above $100 per barrel, and growing inflationary pressure—have already triggered the IMF’s “adverse scenario.”

In April, the IMF outlined three possible global growth paths for 2026 and 2027: a baseline “reference forecast,” an “adverse scenario,” and a more severe downside case.

Under the adverse scenario, global growth would slow to 2.5 percent in 2026, while inflation would rise to 5.4 percent.

The reference forecast, which assumes a short-lived conflict, projects global growth of 3.1 percent and inflation of 4.4 percent.

“This scenario, with every day that passes, is further and further behind in the rear-view mirror,” Georgieva said, suggesting risks are increasingly shifting toward worse outcomes.

In the most severe scenario, global growth would fall to 2 percent, while inflation would climb to 5.8 percent.

News.Az 

By Nijat Babayev