Washington: The Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, cautioned that the ongoing conflict in the Middle East could lead to severe economic repercussions worldwide if it continues until 2027. She indicated that oil prices might surge to approximately $125 per barrel, significantly impacting global economic stability.
According to Yemen News Agency, Georgieva addressed attendees at a conference organized by the Milken Institute in Washington. She emphasized, "We will see a rise in inflation, and therefore, inflation expectations will inevitably begin to lose their stability." Her comments highlighted the potential for worsening economic conditions, as the IMF has already activated its 'negative scenario' due to the current state of prolonged conflict, high oil prices, and mounting inflationary pressures.
In April, the IMF outlined three scenarios for global GDP growth for 2026 and 2027: the 'Background Projection,' the 'Severe Projection,' and the 'Much Worse Severe Projection.' Under the Severe Projection, global growth is anticipated to decelerate to 2.5 percent in 2026, with inflation estimated to escalate to 5.4 percent. The Background Projection, which assumes a brief economic downturn, predicts growth of 3.1 percent and inflation of 4.4 percent.
Georgieva noted, "This scenario, with each passing day, is slipping further and further into the rearview mirror," suggesting that the more optimistic outlook is becoming increasingly unlikely. Under the Severe Projection, global growth is expected to dwindle to only 2 percent, while inflation could climb to 5.8 percent.