Amidst the increasing tension in the Middle East, the International Monetary Fund (IMF) has expressed serious concern and warned that the war related to Iran has started having a negative impact not only on the regional but also on the global economy. A blog issued by top IMF economists said that the conflict, which began after the attacks on Iran by the US and Israel on February 28, has emerged as an uneven economic shock, making financial conditions even tighter.
advice to member countries
According to the IMF, the impact of this war will depend on how long this conflict continues. How much does its scope increase and how much damage is done to the infrastructure and supply chains. The organization has advised its member countries to take policy decisions very thoughtfully considering the situation. Also, IMF has assured that it will continue to provide financial assistance and policy guidance to the countries if needed.
This warning has come at a time when the finance ministers of the G-7 countries have pledged to take all possible steps to stabilize the energy market and reduce economic instability. According to the International Energy Agency (IEA), Iran’s closure of the Strait of Hormuz and damage to infrastructure in the region have caused severe disruption to global oil supplies. Under normal circumstances, about 25 to 30 percent of the world’s total oil and about 20 percent of LNG passes through this route, which further increases its importance.
The IMF has specifically warned that the risk of food insecurity may increase for low-income countries. The prices of food and fertilizers are increasing rapidly, while many developed countries are reducing their foreign aid. In such a situation, poor countries may need additional global cooperation.
What do experts think?
Experts believe that this war may have different effects, but in most situations the results will be in the form of increasing inflation and slowing down of economic growth. Energy importing countries of Asia and Europe are being most affected by fuel prices, while many countries of Africa and Asia are finding it difficult to procure the necessary resources even at high prices.
The IMF has warned that if this conflict prolongs, there will be uncertainty in the global market, energy will become more expensive and it will become more difficult to control inflation. The organization said that it will present a detailed assessment of this entire crisis in its World Economic Outlook report to be released on April 14. Also, an appeal has been made to the member countries to remain alert and face this challenge together.
Comments are closed.