IMF flags oil shock, growth cut
- The IMF and World Bank warned the Iran-linked spike in oil and fertiliser prices will dent global growth and raise inflation. - The IMF cut its 2026 global growth forecast to 2.5 percent amid the energy shock. - Finance chiefs warned poorer, import-dependent countries face tighter fiscal space and higher import bills, the meetings said. (republicworld.com)
The International Monetary Fund says the Middle East war has turned into a global supply shock, with higher oil and fertiliser prices pushing 2026 growth lower and inflation higher. (imf.org) In its April 14 World Economic Outlook, the IMF cut its baseline forecast for global growth in 2026 to 3.1% and said headline inflation would rise modestly this year before easing again in 2027. (imf.org) The Fund said the slowdown and price pressure would hit emerging market and developing economies hardest, while downside risks still dominate if the conflict lasts longer or spreads further. (imf.org) The immediate problem is physical supply. In a joint statement on April 13, the IMF, World Bank Group and International Energy Agency said shipping through the Strait of Hormuz had not normalized and damage to infrastructure could keep fuel and fertiliser prices high for a prolonged period. (imf.org) That matters first for countries that buy most of their energy and farm inputs from abroad. The three institutions said the shock is “highly asymmetric,” with energy importers, especially low-income countries, facing bigger import bills, food-security risks and job losses. (imf.org) Fertiliser is part of the story because it feeds directly into crop costs. When fertiliser prices jump alongside oil and gas, farmers pay more to plant and transport food, and those costs can reach consumers months later through higher grocery prices. (imf.org) Kristalina Georgieva, the IMF’s managing director, said last week that at least a dozen countries were expected to seek new IMF loan programs to deal with surging energy prices and supply-chain disruptions tied to the war. (msn.com) Finance officials left the Spring Meetings with few tools to reverse the shock quickly. The IMF, World Bank and IEA said they would keep coordinating policy advice and financing support while monitoring energy markets, trade flows and country-level stress. (imf.org) For now, the institutions’ message is narrower than a recession call: growth is slowing, inflation is reaccelerating, and the countries with the least fiscal room are taking the first hit. (imf.org; imf.org)
