Global economy is affected by war, IMF Chief warns, food crisis will increase due to expensive oil and fertilizers

News India Live, Digital Desk: Amidst the increasing tension in the Middle East and the Iran-US conflict, International Monetary Fund (IMF) Managing Director Kristalina Georgieva has issued a serious warning regarding the global economy. He clarified that if this war prolongs, its consequences will not be limited to oil prices only, but the world will face a major food inflation crisis. The main reason for the crisis: Blockade of ‘Strait of Hormuz’. After the increased military tension between Israel and Iran on 28 February, the world’s most important waterway ‘Strait of Hormuz’ has almost come to a standstill. Its effects are as follows: Energy price surge: Oil supply disruptions have led to record increases in shipping costs and fuel prices. Fertilizer crisis: This route is the lifeline for fertilizer transportation. Stopping the delivery of fertilizers will directly affect the production of crops, due to which grains and other food items will become expensive. Who will suffer the most? IMF Strategy Director Christian Mumsen said that inflation will hit the poor and developing countries the most because a large part of their expenditure is on food: Country category Food expenditure (% of total income) Low-income countries 36% Emerging economies 20% Developed countries 9% IMF financial assistance More suggestionsGeorgieva, while discussing with journalists in Washington, shared some important points for relief and economic stability: Need for new help: The demand for financial assistance in the coming time may reach 20 billion to 50 billion dollars. Currently 39 IMF programs are running and a dozen new countries are in the queue for help. Advice to central banks: Instead of making hasty changes in interest rates, adopt a policy of ‘wait and watch’ (watch and wait). Warning to governments: Do not take populist steps like export ban or tax cuts in the name of reducing inflation, as this can upset the market balance.