Commodities
IMF Warns Middle East Conflict Is Worsening Global Economic Outlook
The International Monetary Fund warned on Tuesday that the war in the Middle East is adding strain to an already fragile global economy, with emerging and developing countries facing the sharpest impact.In a communique, the IMF's Intergovernmental Group of Twenty-Four on International Monetary Affairs and Development said global economic conditions are deteriorating after a period of modest stability, driven by supply chain disruptions, especially in energy markets, linked to the conflict. It said global growth is now expected to slow in 2026 compared with 2025, while prolonged disruption could push up inflation through higher energy, food, and fertilizer prices, as well as rising supply costs.The group stressed the need to protect key shipping routes and called for an end to attacks on energy infrastructure, warning that such damage is costly to repair, reduces supply, and increases market volatility.It said the global outlook remains uncertain, with rising pressure on oil-importing countries already facing widening external deficits. Higher inflation, combined with rising interest rates and currency pressures, could increase borrowing costs and deepen financial vulnerabilities in emerging and developing economies.Tighter financial conditions and growing investor caution could also reduce private capital flows to these countries, the group said, urging close policy attention. While sound fiscal and monetary policies remain essential, it warned that conventional tools may not be enough to absorb current shocks, calling for stronger international support and more development assistance for vulnerable economies.On climate change, the group said efforts must continue under the principles of fairness and shared responsibility set out in the United Nations Framework Convention on Climate Change and the Paris Agreement. It called for faster emissions cuts and greater investment in sustainable infrastructure, adaptation and biodiversity protection, backed by expanded financing, technology transfer and technical assistance from developed to developing countries.