IMF Warns of Economic Disaster as Middle East War Drags On

International Monetary Fund (IMF) Managing Director Kristalina Georgieva has warned that the global economy could face a 'much worse outcome' if the war in the Middle East drags into 2027 and oil prices hit around $125 per barrel.

In a statement, Georgieva said that the continuation of the war meant that the IMF's 'reference scenario', which forecasted minor growth slowdown to 3.1% and a minor increase in prices to 4.4%, was no longer possible.

The IMF has three scenarios for global GDP growth path in 2026 and 2027, including an adverse scenario that forecasts global growth slowing to 2.5% in 2026 and headline inflation of 5.4%. The severe scenario forecast growth of just 2% and headline inflation of 5.8%.

Chevron Chairman and CEO Mike Wirth also spoke on the same panel, warning that physical shortages in oil supply would begin appearing around the world because of the closure of the Strait of Hormuz, through which 20% of global crude supply passed before the war.