The global economy faces a permanent hit to living standards due to the war in the Middle East, even under the most optimistic scenarios. International Monetary Fund head Kristalina Georgieva warned of slower growth this year than previously forecast, citing “scarring effects” from the conflict.
Georgieva also cautioned that the war could trigger another wave of inflation and subsequently lead to higher interest rates. The IMF is preparing €42.9 billion in emergency aid to mitigate the economic fallout.
As a result, the IMF is revising its global growth forecast downwards and expects an upward revision of global headline inflation, driven by oil price and supply chain disruptions.
The conflict is also contributing to a growing food insecurity crisis, with an estimated 45 million people now at risk.