Georgieva Warns of Inflation and Slower Growth as Iran Conflict Disrupts Global Economy
The head of the International Monetary Fund (IMF) has warned that the ongoing conflict in Iran is set to push the global economy toward higher inflation and slower growth.
“All roads now lead to higher prices and slower growth,” IMF Managing Director Kristalina Georgieva told Reuters in an interview on Monday. She said the war’s economic shocks are significant enough to force the IMF to revise its previously optimistic forecasts for global growth, initially projected at 3.3% in 2026 and 3.2% in 2027.
The U.S. and Israel’s attack on Iran six weeks ago disrupted energy markets, including the effective closure of the Strait of Hormuz, a critical shipping corridor for global oil supply. Although some tanker traffic has resumed, volumes remain far below pre-war levels, with the IMF estimating a 13% reduction in global oil supply. Other critical supply chains have also suffered damage.
Georgieva emphasized that countries with limited reserves will face the most severe consequences. “We are in a world of elevated uncertainty,” she said, citing ongoing geopolitical tensions, technological changes, climate shocks, and demographic shifts.
The combination of rising prices and slower economic growth has heightened fears of stagflation, a phenomenon of high inflation paired with weak growth. The IMF and World Bank are expected to focus on these challenges during next week’s spring meetings, with Georgieva delivering a keynote address on Thursday.
Mark Zandi, chief economist at Moody’s Analytics, said the current trajectory mirrors stagflation, driven by geopolitical risks, energy shocks, and global policy decisions.
