IMF Flags Middle East Conflict as New Global Economic Shock, Hits Energy Importers and Low-Income Economies Hardest

The International Monetary Fund (IMF) has cautioned that the ongoing conflict in the Middle East is dealing a new blow to the global economy, threatening an already fragile recovery and amplifying risks for energy-importing and low-income countries.

In an update issued ahead of its major outlook reports, the Fund said the war is not only disrupting economic activity within the region but also transmitting shocks through global energy and commodity markets. The impact, it noted, is uneven, with the heaviest burden falling on countries with limited fiscal space and high dependence on imported energy. “The shock is global, yet asymmetric,” the IMF stated.

Economies directly affected by the conflict are already experiencing infrastructure damage and interruptions to key sectors, developments the Fund warned could have lasting economic consequences. Growth prospects across the region are expected to soften in the near term, despite some signs of resilience.

The most immediate global impact is being felt through energy markets. The IMF underscored the strategic significance of the Strait of Hormuz, a critical chokepoint through which roughly a quarter to a third of global oil supply and about 20 percent of liquefied natural gas shipments pass.

Rising energy costs are already affecting major importers in Asia and Europe, while several countries in Africa and parts of Asia are struggling to secure sufficient supplies, even at higher prices.

The Fund also pointed to mounting secondary pressures in emerging and developing economies. Higher food and fertilizer prices, alongside tightening global financial conditions, are increasing vulnerability in low-income countries, where food insecurity is worsening and access to external financing is becoming more constrained.

Summing up the outlook, the IMF warned that the conflict is likely to reinforce inflationary pressures and slow global growth. “All roads lead to higher prices and slower growth,” it said, noting that both short-lived and prolonged conflict scenarios would sustain upward pressure on energy markets.

A prolonged crisis, in particular, could keep supply tight and deepen economic strain on import-dependent nations, while persistent geopolitical uncertainty risks prolonging volatility across financial and commodity markets.

The IMF said it will provide a more detailed assessment in its upcoming World Economic Outlook and Global Financial Stability Report scheduled for April 14, followed by the Fiscal Monitor on April 15.