IMF Warns Global Economy Could Get Worse if Middle East War Escalates

IMF Managing Director Kristalina Georgieva. (Wikimedia Commons)

JAKARTA - The International Monetary Fund or IMF has warned that the global economy could face much greater pressure if the war in the Middle East drags on until 2027. As reported by Xinhua, quoted Tuesday, May 5, the warning was delivered by Managing Director Kristalina Georgieva at the Milken Institute conference in Washington, D.C., Monday.

"We will see inflation rise, and then, inevitably, inflation expectations will start to get out of control," Georgieva said.

According to Georgieva, the current conditions are quite worrying. Prolonged conflicts, oil prices in the range or above 100 US dollars per barrel, and increasing inflationary pressures have led the IMF to enter a "bad scenario".

In April, the International Monetary Fund released three scenarios for global economic growth for 2026 and 2027: the reference scenario, the bad scenario, and the severe scenario.

In a worst-case scenario, global economic growth in 2026 is expected to slow to 2.5 percent, while inflation rises to 5.4 percent.

The reference scenario assumes the conflict will be short-lived. In that condition, the global economy is projected to grow 3.1 percent with inflation at 4.4 percent.

However, Georgieva assessed that the reference scenario was further away from reality.

"This scenario, every day that passes, is getting further behind in the rearview mirror," he said.

If the situation worsens, the IMF estimates global growth at only 2 percent, with inflation reaching 5.8 percent.