International Monetary Fund Managing Director Kristalina Georgieva has warned that the war in the Middle East has dealt a fresh blow to an already fragile global economy, saying even the IMF’s most optimistic scenario now points to weaker growth and renewed inflation pressure. Speaking ahead of the IMF-World Bank Spring Meetings, Georgieva said the Fund had been on course to raise its global growth outlook before the conflict upended that trajectory. “Had it not been for this shock, we would have been upgrading global growth,” she said. “But now, even our most hopeful scenario involves a growth downgrade.”
The warning marks a sharp reversal from the IMF’s January 2026 World Economic Outlook update, in which the Fund lifted its global growth forecast to 3.3% for 2026 and 3.2% for 2027. Georgieva said the war has changed that picture by pushing up oil and gas prices, disrupting fertiliser flows, damaging key energy infrastructure and undermining business and consumer confidence. Reuters reported that the conflict has already become one of the biggest energy shocks in recent history, with supply disruptions feeding concerns over weaker global activity and higher prices.
Georgieva said central banks must tread carefully but cannot afford complacency. She argued that policymakers need to prevent temporary energy shocks from spilling into broader inflation expectations, while avoiding an excessive tightening response that could choke off demand and worsen the slowdown. Reuters reported that she urged monetary authorities to balance the inflation risk from higher energy prices against weakening consumption and investment, especially if the oil shock proves prolonged.
The IMF chief also called on governments to rebuild fiscal and financial buffers as higher defence spending and crisis-response costs put extra pressure on already stretched public finances. “Get your house in order,” she told member countries. At the same time, she said the IMF still has about $1 trillion in lending capacity, while continuing to push for completion of the 16th quota review, which would raise quota resources by 50% and strengthen the Fund’s long-term firepower. Reuters reported that the quota increase still requires approval by member governments, including the U.S. Congress.
In a related analysis published this week, the IMF said wars leave deep and lasting economic scars. On average, output in countries where fighting occurs falls by about 3% at the onset of conflict and continues to decline for years, with cumulative losses reaching roughly 7% within five years. Countries fighting abroad may avoid the worst domestic output damage if their own territory escapes physical destruction, but the wider spillovers from energy shocks, trade disruption and fiscal strain can still be severe.
