Higher inflation and weaker growth ahead are inevitable for the global economy as a consequence of the Iran war, the head of the International Monetary Fund warned on Monday as the institution prepares to cut its forecasts.
“All roads now lead to higher prices and slower growth,” IMF managing director Kristalina Georgieva told Reuters in an interview on Monday night.
Before the war, the IMF anticipated issuing a small upgrade on its outlook for global growth of 3.3% in 2026 and 3.2% in 2027, according to Georgieva.
But those expectations have since been upended as the Iran conflict has sent shockwaves through the global economy that are unlikely to unravel anytime soon, even if the war is brought to a rapid resolution.
The U.S. and Israel’s attack on Iran six weeks ago has triggered a significant shock to energy supply as the effective closure of the Strait of Hormuz, a vital shipping corridor, brought marine traffic in the Gulf to a standstill.
