Attacks by the U.S. and Israel on Iran, and that country’s response, make the outlook for the global economy more uncertain, but it is too early to judge the impact, the International Monetary Fund said Tuesday.
In a statement, the Fund said it is closely monitoring developments in the Middle East, where the situation is “highly fluid.”
“It is too early to assess the economic impact on the region and the global economy,” the IMF said. “That impact will depend on the extent and duration of the conflict.”
President Trump, speaking Monday at the White House, said the attacks on Iran could last four to five more weeks.
The Fund said it will provide a comprehensive assessment in new forecasts that are due to be released next month.
In January, the Fund raised its growth forecast for the global economy this year, but warned activity could falter if trade barriers rise again and geopolitical conflicts intensify.
The Fund then expected global output to grow by 3.3%, having previously forecast an expansion of 3%.
In the days after the start of the conflict, energy prices have surged, reflecting the effective closure of the Strait of Hormuz and the suspension of operations at some oil-and-gas facilities in the region.
That could lead to a revival in inflation and a slowdown in growth for energy-importing countries. Government bond yields around the world have also risen and, if sustained, that would lead to higher borrowing costs for households and governments.
“So far, we have observed disruptions to trade and economic activity, surges in energy prices, and volatility in financial markets,” the IMF said.
Increased uncertainty could also restrain household spending and business investment, with the start of the conflict following hot on the heels of a more unpredictable outlook for trade after the U.S. Supreme Court’s ruling that Trump’s country-specific tariffs were illegal. https://www.wsj.com/economy/global/developments-in-middle-east-make-global-outlook-more-uncertain-imf-says-764794ad?mod=global_more_article_pos2
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