The war in the Middle East poses a new systemic risk to the global economy, through three major channels: energy, supply chains and financial markets, warned the International Monetary Fund (IMF) in an analysis published on April 1.
The IMF’s diagnosis is clear: the shock is global but profoundly asymmetric. Net energy importing countries, particularly in Africa, the Middle East excluding Gulf producers and Latin America, are the most exposed. Low-income economies, already faced with narrow budgetary margins and limited foreign currency reserves, risk experiencing a double shock: soaring energy bills and tougher financing conditions.
Energy, the first channel of contagion
The main transmission vector remains the energy market. The de facto blockage of the Strait of Hormuz, through which 25 to 30% of the world’s oil and 20% of liquefied natural gas transit, constitutes, according to the IMF and the International Energy Agency, one of the most serious disruptions in the recent history of the oil market.
For importing countries, the sudden rise in prices acts like a sudden tax on national income, compressing consumption, worsening trade deficits and accentuating tensions on local currencies.
Agriculture and food security under pressure
Beyond oil and gas, the conflict is disrupting global logistics flows. The increase in freight costs, maritime insurance and delivery delays are now affecting strategic products, notably fertilizers, almost a third of which transits through Hormuz.
This disruption comes at a critical time: the planting season in the Northern Hemisphere. The risk is therefore twofold: drop in agricultural yields and new surge in food prices over the coming months.
Risk of return of persistent inflation
The IMF also warns of a return of lasting inflationary pressures. The persistence of high energy and food prices could revive inflation expectations, just when several central banks thought they had regained control.
Ultimately, the increase in the cost of transport, raw materials and industrial inputs risks spreading to all manufactured goods and services, fueling a scenario of slow growth with high inflation.
In this context, central banks could be forced to maintain high rates for longer, which would increase the debt burden, especially for emerging and low-income countries. Bond yields have already started to rise in several markets.
April 14, a key date to measure the extent of the shock
The IMF specifies that the real extent of the damage will depend on the duration of the conflict, its regional extension and the damage caused to energy and logistics infrastructure.
A more comprehensive assessment will be published on April 14 in the new World Economic Outlook and the Global Financial Stability Report, followed the next day in the Fiscal Monitor.
