The International Monetary Fund issued a warning Thursday about the potential economic consequences of ongoing conflicts disrupting global energy markets, stating that sustained higher energy costs could drive inflation upward while slowing economic growth worldwide.
IMF spokesperson Julie Kozack explained to media that the organization is keeping close tabs on conflicts affecting energy production and the resulting market disruptions. The fighting has already caused major interruptions to ocean-based oil and natural gas transport, pushing crude oil costs up more than 50% to above $100 per barrel.
While no member nations have formally requested emergency financial assistance yet, the global financial institution remains prepared to provide support where needed, according to Kozack. She noted that IMF representatives are actively communicating with finance officials and central bank leaders from member nations, along with regional organizations.
The spokesperson emphasized that the war’s overall economic effects will hinge on how long it lasts, its severity, and how far it spreads. The IMF plans to incorporate the conflict’s impact into its revised global economic forecast, scheduled for release in mid-April during the spring meetings of the IMF and World Bank.
Kozack referenced an IMF calculation showing that each 10% rise in energy costs, when maintained for roughly one year, typically leads to a 40-basis point jump in worldwide inflation and reduces economic output by 0.1% to 0.2%.
Should oil prices stay above $100 for an entire year, the consequences for both inflation rates and global economic production would be substantial.
The IMF official advised that central banks must stay alert as energy prices climb, carefully watching whether inflation spreads beyond energy sectors and monitoring if inflation expectations remain stable.
According to the IMF’s initial evaluation, the conflict will likely weaken economic growth in Gulf Cooperation Council nations, though specific details weren’t provided. The actual impact will largely depend on these countries’ capacity to restart their oil and gas export operations, she explained.
