Middle East war dims global economic outlook, says IMF

By Emma Ujah, Abuja Bureau Chief

The International Monetary Fund (IMF) has warned that the ongoing war in the Middle East is casting a shadow over the global economy, threatening recovery and triggering widespread disruptions.

In a blog post by top officials, the IMF said the conflict, beyond its human toll, is “upending lives and livelihoods” while weakening growth prospects for economies still recovering from recent global shocks.

The Fund noted that the impact is global but uneven, with energy-importing countries—especially in Africa and Asia—worst hit due to rising fuel costs and constrained supply.

It highlighted disruptions to oil flows, particularly through the Strait of Hormuz, which handles about 25–30% of global oil trade and 20% of liquefied natural gas, describing it as one of the largest shocks to the global oil market.

For oil-importing nations, the IMF said higher import bills act like “a sudden tax on income,” straining fiscal positions and external reserves.

It added that countries across Africa, Asia and Latin America are also facing rising food and fertiliser prices, worsening food insecurity and tighter global financial conditions. Low-income nations are most vulnerable, as food accounts for a large share of household spending.

“Some countries may require increased external support at a time when such assistance is declining,” the IMF said.

The Fund stressed that the duration of the conflict will determine its global impact but warned it will likely drive higher inflation and slower growth.

Higher energy costs are already raising production expenses and squeezing consumer purchasing power, while Europe risks a resurgence of its 2021–2022 energy crisis, especially in gas-dependent economies.

Global trade is also affected, with supply chain disruptions, higher freight and insurance costs, and delays in shipments. Fertiliser supply disruptions could further push up food prices.

Financial markets have reacted negatively, with falling stock prices, rising bond yields and increased volatility tightening financial conditions.

The IMF said many developing economies, particularly in sub-Saharan Africa, remain vulnerable due to weak reserves and high debt levels.

It advised countries to adopt targeted policy responses and reaffirmed its support through policy guidance and financial assistance.

IMF Managing Director Kristalina Georgieva said: “In an uncertain world, more countries need our support. We are there for them.”

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