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The ongoing disruptions related to the war in the Middle East are likely to result in lower growth and higher inflation worldwide, the International Monetary Fund (IMF) warned on Thursday.
The ongoing disruptions related to the war in the Middle East are likely to result in lower growth and higher global inflation, the International Monetary Fund (IMF) warned on Thursday.
The organization’s latest projections, published last month, forecast global growth limited to 3.1% this year due to the conflict and the blockage of energy flows it has caused in the Gulf.
The IMF nevertheless warned that the global economy could slide into a more “unfavorable” scenario if the war were to continue.The organization’s spokesperson, Julie Kozack, stated on Thursday that ‘we are heading towards the unfavorable scenario.’
‘Expectations regarding inflation remain reasonably well anchored and financial conditions remain accommodative,’ she tempered during her regular press briefing.
Economic players, particularly central banks, are closely watching how households and investors perceive future inflation as this is likely to change their current behaviors and create a deleterious snowball effect (for example, if companies take the initiative by raising their prices).
The IMF will update its global economic forecasts in July.
