WASHINGTON: IMF Managing Director Kristalina Georgieva has warned of difficult times ahead for the global economy if the Middle East conflict remains unresolved and oil prices continue to stay high.
Speaking at a press briefing during the IMF and World Bank spring meetings in Washington, Georgieva said countries must prepare for economic strain if the crisis persists.
“We must brace for tough times ahead,” she said, highlighting the growing risks to global stability.
The ongoing conflict, triggered by US-Israeli strikes on Iran in late February, has severely disrupted oil supply routes, particularly the Strait of Hormuz, a crucial corridor for global energy shipments.
As a result, energy prices have surged, placing pressure on economies worldwide—especially those heavily dependent on oil imports.
Georgieva also warned that rising energy costs could spill over into food prices, particularly if fertilizer supplies are disrupted or remain expensive.
“We are concerned about risks for inflation moving into food prices,” she said, emphasizing the broader impact on vulnerable populations.
She urged central banks to adopt a cautious “wait and see” approach when considering interest rate changes, particularly in countries where inflation expectations remain stable.
However, she noted that nations with weaker monetary credibility may need to take stronger measures to control inflation.
Georgieva expressed hope that the conflict could still be resolved quickly, which would reduce the need for aggressive economic interventions.
She also encouraged countries facing financial stress to seek assistance from the IMF without delay.
“Move fast, because the sooner we act, the more we would protect the economy and the people,” she said.
The IMF currently has 39 active financial assistance programs and expects new requests from at least a dozen countries, many of them in sub-Saharan Africa.
Georgieva further cautioned governments against broad and untargeted economic measures, such as sweeping tax cuts or export controls, warning that such policies could prolong the impact of high prices instead of easing the burden.
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