The war in the Middle East will lead to higher inflation and slower global growth, the head of the International Monetary Fund told Reuters on Monday, ahead of a fresh forecast for the world economy planned by the global lender for next week.
Barring the war, the IMF had expected a small upgrade in its projection for global growth of 3.3% in 2026 and 3.2% in 2027.
“Had we not had this war we would have seen a small upgrade of our growth projections. Instead, all roads now lead to higher prices and slower growth,” said Kristalina Georgieva, managing director of the IMF.
Even a rapid end to hostilities and a fairly rapid recovery would result in a “relatively small” downward revision of the growth forecast and an upward revision of its inflation forecast, she said. If the war was protracted, the effect on inflation and growth would be greater, she said.
Georgieva said the IMF had received requests for financing assistance from some countries, but did not name them. She said the IMF could augment some existing lending programs to meet countries’ needs.
(Reporting by Andrea Shalal; editing by David Gaffen)