The war is darkening the outlook for the world economy – whether or not a fragile ceasefire holds, the head of the International Monetary Fund warned this morning.
Managing Director Kristalina Georgieva said the fund would downgrade its forecast for the world economy next week.
“Had it not been for this shock, we would have been upgrading global growth,” Georgieva said before next week’s IMF-World Bank meetings. “But now, even our most hopeful scenario involves a growth downgrade.”
A man stands amid rubble from a building destroyed in an Israeli airstrike on Beirut.Getty Images
The world economy had proved resilient in the face of Donald Trump’s decision to impose sweeping global tariffs last year. In January, the 191-country IMF had upgraded the global growth outlook to 3.3 per cent and was poised to do so again when its new forecasts came out next Tuesday.
But the war changed everything. The conflict has driven up the price of oil and natural gas; damaged oil refineries, tanker terminals and other energy infrastructure; disrupted shipments of fertiliser the world’s farmers depend on; and damaged the confidence of businesses and consumers.
Georgieva said “growth will be slower – even if the new peace is durable”.
And she told policymakers “be careful not to make things worse” with “go-it-alone” moves such as limiting exports and imposing price controls. “Don’t pour gasoline on the fire,” she said.
AP