By : Business Editor
Jordan Daily - The International Monetary Fund (IMF) has warned that the ongoing Middle East conflict could push the global economy into stagflation, as rising prices combine with slowing growth, according to a blog post cited on Monday.
The IMF said the war is impacting the world economy through energy supply disruptions, trade interruptions and financial market volatility, with effects already spreading across regions.
Energy markets have been hit hardest, with disruptions around the Strait of Hormuz - a key route for roughly a quarter of global oil shipments - driving up fuel costs. This has increased expenses for governments, businesses and households, particularly in fuel-importing economies.
The Fund also flagged growing strain on global supply chains, as shipping routes are diverted from conflict zones, raising freight and insurance costs and delaying deliveries. Fertiliser supplies, heavily dependent on Gulf transit routes, are also at risk, potentially pushing food prices higher and worsening vulnerabilities in low-income countries.
Higher energy and food prices are expected to feed into broader inflation while weakening economic activity, the IMF said, warning that recent progress in curbing inflation could be reversed.
Financial markets have already shown signs of stress, with rising borrowing costs and tighter financial conditions adding pressure on developing economies facing higher import bills and limited fiscal space.
The IMF urged policymakers to adopt targeted responses and said it would expand financial support for vulnerable countries, adding that a fuller assessment would be provided in its upcoming economic outlook report.
