Washington:The global economic impact of the ongoing conflict in the Middle East will depend largely on how long the war continues and how much it affects energy supplies, a senior official of the International Monetary Fund said on Tuesday.
The IMF said it is still too early to measure the full damage to the world economy. However, officials warned that rising oil and gas prices and disruptions to trade routes are already creating uncertainty in global markets.
Energy markets have reacted strongly as tensions around the Strait of Hormuz continue. The narrow sea passage is one of the world’s most important routes for oil shipments. Any disruption there quickly pushes up global energy prices. Analysts say that if supply problems continue, inflation could rise again in many countries.
The IMF noted that the scale of the impact will depend on three main factors. These include the length of the conflict, the level of damage to infrastructure, and whether energy price increases remain temporary or become long lasting. If the conflict is short, the effects may be limited to temporary price spikes and market volatility. But a prolonged war could slow global growth and raise the risk of recession in vulnerable economies.
In Europe, policymakers are closely watching developments. The European Central Bank has warned that a long conflict could push inflation higher across the euro area, making it harder to stabilize prices. Higher fuel and transport costs could affect households and businesses alike.
Developing nations are also concerned. Countries that rely heavily on imported oil and gas fear that rising prices will increase their import bills and weaken their economic recovery. Pakistan has already cautioned that a prolonged energy shock could slow its growth and strain public finances.
Financial markets have reacted with caution. Stock markets in several regions have shown signs of volatility as investors assess the risks. Oil prices have risen sharply in recent days, reflecting concerns about supply disruptions.
Despite these warning signs, the IMF stressed that the situation remains fluid. Officials said they are closely monitoring developments and will provide a clearer assessment in their upcoming global outlook reports.
For now, much depends on how the conflict unfolds. Economists say that stability in energy supply will be key to preventing wider economic damage.