17/04/2026 09:12 AST
IMF chief Kristalina Georgieva warned Wednesday of difficult times ahead for the global economy if war in the Middle East is unresolved and oil prices stay high, adding that inflation risks could seep into food prices. "We must brace for tough times ahead" if the conflict persists, she told reporters at a press briefing during the International Monetary Fund and World Bank's spring meetings in Washington.
The gathering brings government and financial leaders to the US capital this week, with policymakers looking to limit economic fallout from the war. US-Zionist entity strikes launched against Iran on February 28 sparked Tehran's retaliation, virtually closing the Strait of Hormuz, a key shipping route for oil and fertilizers. Energy prices have since surged, squeezing countries-especially vulnerable economies and those dependent on oil imports from the region.
"We are concerned about risks for inflation moving into food prices should the delivery of fertilizers at a reasonable price (not be) restarted soon," Georgieva said. But as countries move to limit price shocks on their citizens, Georgieva urged central banks to "wait and see" before adjusting interest rates if they can do so.
She said this was particularly the case where the public has a "well-anchored" expectation of inflation being kept under control. "If we are to move faster out of the war, it may not be necessary to take action," she said. But she conceded that countries where central banks lack such credibility might need to send stronger signals. For now, "we are still at a time when a faster resolution of hostilities is possible," she said.
Noting that fallout is "highly asymmetric," Georgieva urged IMF member countries to come forward to the Washington-based lender if they need financial assistance during the conflict.
Low-income countries spend around 36 percent of their consumption on food, while emerging markets spend about 20 percent, said the IMF's director of strategy Christian Mumssen in press remarks.
Advanced economies spend about nine percent, he added.
The IMF estimates for now that near-term demand for new fund financing would be in the range of $20 billion to $50 billion. "Currently, we have 39 programs, and prospective demand for new programs from at least a dozen countries, a number of them in sub-Saharan Africa," Georgieva said of the fund's financial aid. "The sooner we act, the more we would protect the economy and the people," she added.
She stressed the need to protect fiscal sustainability as countries move to help their populations, cautioning that "untargeted measures, export controls or broad-based tax cuts" could serve to "prolong the pain of high prices."
Asia is more vulnerable to an energy shock than other regions because of its heavy reliance on Middle East fuel, an International Monetary Fund executive said, warning of an acute hit to growth if a prolonged war triggers supply shortages. The region's economies entered 2026 on solid footing due to lower-than-expected US tariffs, a strong tech cycle that has boosted exports and loose financial conditions, said Krishna Srinivasan, director of the IMF's Asia-Pacific department.
Such tailwinds are somewhat offsetting headwinds from the energy shock caused by the Middle East conflict, keeping the IMF's Asian growth forecasts broadly unchanged from January, he told Reuters in an interview on Wednesday. But Asia's highly energy-intensive economy and its huge reliance on Middle East fuel will keep the region exposed to the fallout from the war, he said.
The use of oil and gas amounts to about 4 percent of Asia's gross domestic product (GDP), nearly double that of Europe, according to the IMF. Given its limited production capacity, net oil and gas imports amount to about 2.5 percent of GDP for Asia, it said.
"This is a shock, which is going to affect Asia more than other regions," Srinivasan said. "What we're going to see is higher inflation, weaker growth and weaker current account balances."
Under its more benign "reference" scenario of its World Economic Outlook, the IMF projected Asia's growth to moderate from 5 percent in 2025 to 4.4 percent in 2026 and 4.2 percent in 2027.
But in its "adverse" or "severe" scenarios, growth in Asia could come down by 1 to 2 percentage points cumulatively through 2027, he said. "This is a shock which has a price impact and a quantity impact," Srinivasan said. The conflict, if prolonged, could trigger not just price rises but shortages in oil-related chemicals and gas used to produce various machinery and food, he added.
"If you have a price shock and shortages, that could lead to greater non-linearities, and so the growth impact would be that much more acute, especially if the shock is not transient."
The IMF expects inflation in Asia to rise from 1.4 percent in 2025 to 2.6 percent this year, before easing to 2.4 percent in 2027. Asian central banks should look through the shock until there is more clarity on its impact on the economy, but "be very careful and agile, so that if you see inflation expectations getting unanchored, you can start tightening," Srinivasan said. Given limited fiscal buffers after huge spending to combat the pandemic, Asian policymakers must ensure any fiscal support is timely and targeted to people who need it most, he said.
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