IMF warns of oil-driven shock
- The IMF cut its 2026 global growth outlook and warned financial stability risks are rising amid the Middle East war. - Former IMF deputy Gita Gopinath said the Gulf conflict produced an oil shock larger than the 1970s. - That raises household pain in fuel, food and fertiliser for import-dependent economies like Nepal, risking slower growth and higher prices (businesstoday.in).
The International Monetary Fund said on April 14 that war in the Middle East has darkened the 2026 outlook, cutting global growth to 3.1% and warning that higher energy prices could feed inflation again. (imf.org) In its April 2026 World Economic Outlook, the Fund lowered its 2026 forecast from 3.3% in January to 3.1%, assuming the conflict stays limited rather than spreading into a wider supply shock. (imf.org) The International Monetary Fund’s April 2026 Global Financial Stability Report said the war is raising inflation pressure, tightening financial conditions and creating channels through which market turmoil could turn into broader instability. (imf.org) Gita Gopinath, the former International Monetary Fund deputy managing director and now a Harvard professor, said on April 23 that the Gulf conflict had produced an oil shock “bigger than what we saw during the 1970s.” She said the damage would spread through fuel, food and fertiliser costs if disruptions persist. (businesstoday.in) Oil matters beyond petrol because it raises shipping, electricity, farm input and factory costs, which then show up in grocery bills and transport fares. The International Monetary Fund said rising commodity prices and firmer inflation expectations are already testing the recovery that began after the pandemic and the 2022 inflation surge. (imf.org) The pressure is sharper in import-dependent economies. The Fund cut its 2026 forecast for emerging market and developing economies to 3.9% from 4.2% in January as higher energy and food costs hit vulnerable countries harder. (msn.com) Nepal is one example because it depends on imported fuel, food and farm inputs. The World Bank said this month that disruptions in fertiliser imports could raise production costs and reduce agricultural output, while fuel supply constraints could weigh on investment more broadly. (worldbank.org) Reporting from Kathmandu this month said Nepal’s government had allocated Rs27 billion for fertiliser imports in the current fiscal year, while domestic stocks stood at 137,500 tonnes with another 45,000 tonnes en route before the paddy planting season. (kathmandupost.com) The International Monetary Fund is not yet forecasting a global recession in its baseline. But its April reports say the path now depends heavily on whether the war stays contained and whether oil and shipping disruptions ease rather than intensify. (imf.org)
