The head of the International Monetary Fund has warned that the Iran war will permanently damage the global economy, even if a durable peace deal can eventually be reached in the Middle East.
In remarks delivered as the ceasefire in the conflict was reported to be under strain, IMF managing director Kristalina Georgieva said the “scarring effects” already caused by the war would weigh on global activity and mean slower growth this year than had first been expected.
Georgieva said that even the “most hopeful scenario” would not avoid a downgrade to growth forecasts. Her comments suggest that the economic fallout from the conflict is likely to linger well beyond any eventual pause in fighting.
The warning adds to concern that uncertainty in the region could continue to disrupt trade, investment and confidence around the world. While the IMF head pointed to the possibility of peace, she stressed that the damage already done would leave a lasting mark on living standards.
Her assessment comes at a time when policymakers are already contending with a fragile global outlook. The prospect of a conflict-related slowdown, combined with the risk of further instability, increases pressure on governments and central banks trying to support growth.
The IMF chief’s remarks were made in a speech and were reported as the ceasefire appeared increasingly uncertain. The message was clear: even if the fighting stops, the economic consequences may not fade quickly.
