WASHINGTON (AP) — The Iran war is darkening the outlook for the world economy, the head of the International Monetary Fund warned Thursday, adding that even a fragile ceasefire would not erase the broader economic hit. Speaking ahead of next week’s IMF-World Bank spring meetings, IMF Managing Director Kristalina Georgieva said the fund will downgrade its forecast for global growth as the conflict continues to squeeze energy supplies, disrupt shipments, and weigh on confidence.
Georgieva said the IMF would have expected to improve its outlook in the absence of the shock. She told attendees that “Had it not been for this shock, we would have been upgrading global growth,” explaining that “But now, even our most hopeful scenario involves a growth downgrade.”
The IMF had recently signaled stronger growth expectations before the war escalated. The global institution’s previous outlook had been upgraded in January to 3.3% for global growth, with the fund positioned to provide updated forecasts at spring meetings next Tuesday, according to Georgieva.
She said the war, which began Feb. 28, has set off a chain reaction across energy and supply networks. In her description, the conflict has driven up the price of oil and natural gas, damaged energy infrastructure such as oil refineries and tanker terminals, and disrupted shipments of fertilizer that farmers around the world depend on.
Georgieva tied those disruptions to a second-order effect on the broader economy: businesses and consumers have faced damaged confidence. That uncertainty, she said, is part of why the IMF expects slower growth even if political conditions stabilize.
Her warning came after the United States and Iran announced a ceasefire Tuesday. The AP report said President Donald Trump had threatened that without a deal, “a whole civilization will die tonight,” underscoring the political pressure surrounding the talks.
Despite the announced ceasefire, Georgieva said the IMF still expects weaker growth. She told the meeting that “growth will be slower — even if the new peace is durable,” linking the downgrade to the war’s ongoing economic spillover effects.
Georgieva said the energy shock will fall hardest on some regions. She said Sub-Saharan Africa and small island countries are most vulnerable, while noting that governments around the world have only limited room to cushion the damage because their debts are already high.
She pointed to steps some governments have taken to limit the effect of higher energy costs. Georgieva cited policies such as urging or requiring people to work from home, encouraging greater use of public transportation, and limiting travel by public officials.
In urging policymakers to avoid worsening the outlook, Georgieva said leaders should be “be careful not to make things worse.” She warned against “go-it-alone” measures such as limiting exports and imposing price controls, saying “Don’t pour gasoline on the fire,’’ in remarks before the spring meetings.