War in the Middle East: the continuation of the conflict brings the global economy closer to an “unfavorable” scenario, warns the IMF

Continued disruptions linked to the war in the Middle East risk leading to less growth and more inflation globally, the International Monetary Fund (IMF) warned on Thursday.

The organization’s latest projections, published last month, forecast global growth limited to 3.1% this year due to the conflict and the blockage of energy flows it has caused in the Gulf.

The IMF warned, however, that the world economy risked sliding towards a more “unfavorable” scenario if the war were to last.

Updated global economic forecasts in July

The organization’s spokesperson, Julie Kozack, said Thursday that “we are heading towards the unfavorable scenario.” “Inflation expectations remain reasonably well anchored and financial conditions remain accommodative,” she said during her regular press briefing.

Economic actors, in particular central banks, monitor the way households and investors perceive future inflation because this risks modifying their current behavior and creating a deleterious snowball effect (for example if companies take the lead by increasing their prices).

The IMF will update its global economic forecasts in July.