IMF chief says no global slowdown in sight yet, but risks are high

Washington: The world economy is so far weathering the shock of the war in the Middle East despite a surge in commodity prices, higher inflation and strains in financial conditions, with no signs yet of a global slowdown, IMF chief Kristalina Georgieva said Monday.

Georgieva, ‌managing director ⁠of ⁠the global lender, welcomed Sunday's agreement by the U.S. and Iran to ​end their war and reopen the Strait of Hormuz, but warned in ​a new blog that an intensification of the conflict of supply disruptions posed a "clear risk to global growth."

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The IMF ​will release an updated forecast on ⁠July 8. ‌In April, it issued three scenarios for ​global GDP ​growth in 2026 and 2027, with its middle "adverse ⁠scenario" calling for growth slowing down to 2.5% in ​2026 and headline inflation of 5.4%.

Georgieva last ​month said that adverse scenario was already in play, but her latest comments suggest the fund may revert to its reference scenario, which assumed a short-lived Iran war and saw growth of 3.1% in 2026.

The framework deal marks ‌the biggest breakthrough towards resolving a war that began with joint U.S.-Israeli strikes on Iran in February before escalating into a wider ⁠regional conflict that has killed thousands, upended energy markets and stoked recession fears for the global economy.

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"More than three months into ​the war in the Middle East, the global economy appears to be holding up. Commodity prices, inflation and expectations for it, and financial conditions have all been impacted-but not yet in ways that signal a global slowdown," she wrote.