Escalating Middle East conflict could hurt global economy - IMF
By Abigail Townsend
Date: Monday 23 Jun 2025
(Sharecast News) - The head of the International Monetary Fund warned on Monday that mounting geopolitical tensions in the Middle East could hurt economic growth worldwide.
Speaking to Bloomberg a day after the US attacked Iran, Kristalina Georgieva said: "We're looking at this as another source of uncertainty in what has been a highly uncertain environment."
In particular, she noted that the IMF was watching how the crisis impacts oil and gas prices, and if there is any disruption to energy supplies.
She continued: "There could be secondary and tertiary impacts. Let's say there is more turbulence that goes into hitting growth prospects for large economies, then you have a trigger impact of downward revisions in prospects for global growth."
Oil prices soared after Israel launched a series of attacks against Iran last week before easing back slightly. But they spiked once again on Sunday after the White's House's surprise attack on Iranian nuclear sites.
As at 1230 BST, Brent crude was up 1% at $78.08 while West Texas Intermediate was ahead 1% at $74.88.
Senior officials initially denied the US was interested in regime change in Iran, insisting the attacks were aimed at curbing the country's nuclear ambitions.
However, Donald Trump posted on Truth Social: "It's not politically correct to use the term 'Regime Change,' but if the current Iranian Regime is unable to MAKE IRAN GREAT AGAIN, why wouldn't there be a Regime change??? MIGA!"
The world is now bracing for Iran's response, with fears mounting that it will close the Strait of Hormuz.
The narrow waterway separates Iran from the Gulf States and is a vital conduit for the world's seaborne oil supplies; around a fifth of the globe's total oil consumption passes through it.
On Sunday, Iran's parliament reportedly backed closing it. Iran has never previously closed the waterway, although it has threatened to before.
The IMF cut its growth forecasts for the global economy earlier this year, to 1.8% from 2.7% primarily on the back of Trump's trade war.
Georgieva told Bloomberg: "We have already revised downwards growth projections for this year and we will be coming up with our next projections in July.
"So far, what we see, in the first two quarters of the year, broadly confirms the picture we have painted in April - it is somewhat slower global growth but no recession."
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