The International Monetary Fund (IMF) said on Tuesday that the global economic outlook has deteriorated sharply following the outbreak of conflict in the Middle East in late February, warning that the closure of the Strait of Hormuz could trigger an energy crisis on an 'unprecedented' scale. In its latest World Economic Outlook report, the IMF noted that the conflict has disrupted a period of stable growth. Prior to the escalation, the Fund had been prepared to raise global growth forecasts, citing a surge in technology investment and easing trade tensions. The IMF stated that the severity of the economic shock will depend on the duration and scale of the conflict, as well as the time required to normalize energy production and transport through the critical hydrocarbon hub. The report identified three primary channels for the shock: surging energy and commodity prices leading to higher inflation, disruptions to supply chains, and financial market instability characterized by capital flight and a stronger U.S. dollar. Low-income energy importers are expected to be the hardest hit, according to the Fund. Meanwhile, energy-exporting Gulf nations face risks from infrastructure damage and export restrictions, alongside a downturn in tourism and broader economic activity.
The International Monetary Fund (IMF) said on Tuesday that the global economic outlook has deteriorated sharply following the outbreak of conflict in the Middle East in late February, warning that the closure of the Strait of Hormuz could trigger an energy crisis on an 'unprecedented' scale. In its latest World Economic Outlook report, the IMF noted that the conflict has disrupted a period of stable growth. Prior to the escalation, the Fund had been prepared to raise global growth forecasts, citing a surge in technology investment and easing trade tensions. The IMF stated that the severity of the economic shock will depend on the duration and scale of the conflict, as well as the time required to normalize energy production and transport through the critical hydrocarbon hub. The report identified three primary channels for the shock: surging energy and commodity prices leading to higher inflation, disruptions to supply chains, and financial market instability characterized by capital flight and a stronger U.S. dollar. Low-income energy importers are expected to be the hardest hit, according to the Fund. Meanwhile, energy-exporting Gulf nations face risks from infrastructure damage and export restrictions, alongside a downturn in tourism and broader economic activity.
The International Monetary Fund (IMF) said on Tuesday that the global economic outlook has deteriorated sharply following the outbreak of conflict in the Middle East in late February, warning that the closure of the Strait of Hormuz could trigger an energy crisis on an 'unprecedented' scale. In its latest World Economic Outlook report, the IMF noted that the conflict has disrupted a period of stable growth. Prior to the escalation, the Fund had been prepared to raise global growth forecasts, citing a surge in technology investment and easing trade tensions. The IMF stated that the severity of the economic shock will depend on the duration and scale of the conflict, as well as the time required to normalize energy production and transport through the critical hydrocarbon hub. The report identified three primary channels for the shock: surging energy and commodity prices leading to higher inflation, disruptions to supply chains, and financial market instability characterized by capital flight and a stronger U.S. dollar. Low-income energy importers are expected to be the hardest hit, according to the Fund. Meanwhile, energy-exporting Gulf nations face risks from infrastructure damage and export restrictions, alongside a downturn in tourism and broader economic activity.
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IMF warns Hormuz closure threatens "unprecedented" global energy crisis
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