How War Shapes the Global Economy: IMF Analysis

The International Monetary Fund has warned that the ongoing conflict in the Middle East is likely to result in higher global prices and slower economic growth if the region continues to experience disruptions in the export of oil, gas, and fertilizer from the Gulf.

In a blog post published on March 30, 2026, the fund’s main department heads, including chief economist Pierre-Olivier Gourinchas, stated that all roads lead to higher prices and slower growth worldwide regardless of how the war shapes the global economy.

The IMF analysis indicates that rising costs for food and energy will negatively impact economic growth this year and could leave lasting scars on the global economy across all continents.

Supply Chain Disruptions in the Gulf

A primary driver of the IMF’s concern is the potential throttling of essential commodities moving out of the Gulf. The organization specifically highlighted the vulnerability of the strait of Hormuz, noting that approximately one-third of global fertilizer production travels through the waterway.

The restriction of oil, gas, and fertilizer shipments is expected to drive up costs for petrol, diesel, and food, which the IMF warns will harm living standards for households globally.

Geopolitical Tensions and Economic Risk

The IMF’s warning followed statements made by Donald Trump, who threatened to obliterate the energy infrastructure of Iran unless the country agreed to a peace deal.

The fund’s analysis serves as a warning regarding the lasting consequences of such actions on struggling households and the broader global economic system.

Market Winners and Losers

The economic impact of the conflict is expected to be uneven across different nations. The IMF found that countries acting as net exporters of oil and gas, such as the United States, will gain from the increase in fossil fuel prices.

Conversely, other nations will face higher bills for energy and food. This pressure is expected to extend to businesses, which may be forced to raise their own prices to compensate for increased costs.

Fiscal and Monetary Pressures

The IMF warned that the crisis could force central banks to raise interest rates as a means to combat the resulting inflation.

the fund noted that governments already burdened with high levels of borrowing will face significant constraints. These nations will have limited access to the funds necessary to cushion the most severe effects of the economic crisis.

Although the war could shape the global economy in different ways, all roads lead to higher prices and slower growth

International Monetary Fund