Kristalina Georgieva, the Managing Director of the International Monetary Fund (IMF), has issued a warning regarding the potential widespread effects of US actions against Iran, beyond just the energy sector. She highlighted the heightened global uncertainty and its implications for economic growth.
Georgieva noted that the most immediate impact has been on energy prices, with Brent crude oil futures initially surging by 5.7% to $81.40 per barrel in Asian trading before retreating. The IMF is closely monitoring the situation, as further instability could lead to reduced growth prospects for major economies and trigger a downgrade in global growth forecasts.
Earlier in April, the IMF had already lowered its global economic growth outlook, citing the US-led global trade "restart" as a factor for slowing growth. Despite the global economy likely avoiding a recession, the rising uncertainty is expected to dampen growth prospects.
The IMF is particularly focused on how Middle Eastern developments might affect the risk premium on oil and gas. Georgieva also mentioned the possibility of disruptions in energy supply routes.
Regarding the US economy, Georgieva anticipates continued inflation decline, potentially leading the Federal Reserve to consider rate cuts by the end of the year. However, she cautioned that increased volatility could harm businesses, as uncertainty tends to deter investment and consumer spending.
