‘All roads lead to higher prices and slower growth,' warns IMF chief as Iran war hits global economy

Key Points

• IMF managing director Kristalina Georgieva warned that the Iran war is causing 'higher prices and slower growth' for the global economy.
• The conflict has triggered the worst-ever disruption to global energy supply, with Iran's blockage of the Strait of Hormuz shrinking oil output by roughly 13 percent.
• The IMF plans to lower its growth projections and raise its inflation outlook in the upcoming World Economic Outlook, even if hostilities end quickly.
• The shock will hit poor countries the hardest, as the war weighs on global oil supply and related supply chains like helium and fertilizers.

Full Details

IMF managing director Kristalina Georgieva has warned that the Iran war is driving the global economy toward 'higher prices and slower growth,' calling it a stagflationary threat. She told Reuters that the conflict has caused the worst-ever disruption to global energy supply, with Iran's blockage of the Strait of Hormuz—through which one-fifth of the world's oil and gas passes—shrinking oil output by roughly 13 percent and affecting supply chains for helium and fertilizers. The IMF plans to lower its 2026 global growth projection from about 3.3% and raise its inflation outlook in the upcoming World Economic Outlook, even if hostilities end quickly. A prolonged war would amplify these effects, raising fears of stagflation amid geopolitical, technological, climate, and demographic uncertainties. The issue will dominate discussions at the IMF-World Bank spring meetings next week, where Georgieva will present a speech on Thursday. As she stated, 'All of this means that after we recover from this shock, we need to keep our eyes open for the next one.'