IMF warns of looming inflation crisis on back of US-Israel war on Iran

The conflict has driven up prices of oil, natural gas, damaged refineries and other energy infrastructure.The International Monetary Fund has warned of a potential inflationary crisis with the Israel-war-on-Iran" class="entity-link entity-event" data-entity-id="38678" data-entity-type="event">US-Israel war on Iran darkening the economic outlook, whether or not the fragile ceasefire holds.IMF Managing Director Kristalina Georgieva said on Thursday that the fund will downgrade its forecast for the world economy next week.Recommended Stories list of 4 itemslist 1 of 4Trump threatens 50% tariffs on countries that supply Iran with weaponslist 2 of 4The economic cost of US-Israel war on Iranlist 3 of 4What is Iran’s Strait of Hormuz protocol and will other nations accept it?list 4 of 4Is the world economy heading towards stagflation?end of list“Had it not been for this shock, we would have been upgrading global growth,” Georgieva said in remarks before next week’s IMF-World Bank Spring Meetings. “But now, even our most hopeful scenario involves a growth downgrade.”The world economy had proven resilient in the face of United States President Donald Trump’s decision to impose sweeping taxes last year on imports from most the world’s countries. In January, the 191-country IMF had upgraded the global growth outlook to 3.3 percent and was poised to do so again when its new forecasts came out next Tuesday.But the war, which began on February 28, changed everything. The conflict has driven up the price of oil and natural gas; damaged oil refineries, tanker terminals and other energy infrastructure; disrupted shipments of fertiliser that the world’s farmers depend on; and damaged the confidence of businesses and consumers.Georgieva added that member countries need to “get your house in order” to build resilience as defence spending weighs on the global economy.Georgieva also said she is optimistic the IMF will win approval from the US Congress this year for a review that would increase quota lending resources by 50 percent, making more of its $1 trillion in lending capacity immediately available. The US is the IMF’s largest shareholder.