Mideast war to test world economy, ‘new shocks’ will keep coming, says IMF chief

IMF managing director Kristalina Georgieva speaks during a press conference at the IMF headquarters in Washington, D.C., on Oct. 16, 2025. “We are in a world of more frequent, more unexpected shocks,” Georgieva said at the Asia in 2050 Conference in Bangkok. Photo by BRENDAN SMIALOWSKI /AFP via Getty Images

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International Monetary Fund (IMF) managing director Kristalina Georgieva said the war in the Middle East will test global economic resilience and warned that “new shocks in different shapes and sizes” will keep coming.

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Underscoring the IMF’s concern at the suffering and loss of life resulting from the Middle East crisis, Georgieva warned that a prolonged conflict could affect energy prices, market sentiment, economic growth and inflation, “placing new demands on the shoulders of policymakers everywhere.”

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“We are in a world of more frequent, more unexpected shocks,” Georgieva said at the Asia in 2050 Conference in Bangkok. “Most of the time, we cannot predict what exactly they will be. But all of the time, we can strive to be ready for them.”

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Iran’s retaliation to the United States-Israel strikes has already disrupted travel and the flow of oil through the Strait of Hormuz, and Bloomberg Economics scenarios show that elevated energy prices could spur inflation and damage global growth. That’s on top of tariff turmoil, which Georgieva last month warned could undercut an otherwise “buoyant” U.S. economy.

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The IMF is closely monitoring the Middle East conflict, and will incorporate its findings in the World Economic Outlook that will be published in April, Georgieva said.

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As recently as January, the IMF revised its global growth projections slightly higher to 3.3 per cent for 2026 and 3.2 per cent for next year.

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The IMF chief had praise for Asia for rebuilding institutions, external buffers and investor credibility after the financial crisis in 1997-1998. But Georgieva cautioned that the region still needed to brace for a world of “repetitive shocks” that include disruptive technology, trade and geopolitics.

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She urged Asia to link up more internally to shield itself from trade uncertainties that will likely continue. The region can accelerate integration by lowering non-tariff barriers.

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“There is no point lamenting on what is happening outside your remit,” she said. “Focus on what is in your hands, on what you can do to get your country, your economy in the best of shapes for this world we have entered.”

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The Middle East war has already hit global markets, with some of the hardest-hit being tech-heavy indexes in South Korea and Taiwan, which have seen overseas investors offload billions of dollars of stocks.

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“The sooner we see the end of the calamity, the better for the whole world,” Georgieva said.

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