NEW YORK, May 5 (Xinhua) — International Monetary Fund (IMF) Managing Director Kristalina Georgieva warned on Monday that the global economy would face a “much worse outcome” if the Middle East war drags on into 2027 with oil prices hitting around 125 dollars per barrel.
“We are going to see inflation climbing up, and then inevitably, inflation expectations would start de-anchoring,” she said at a conference hosted by the Milken Institute in Washington, D.C.
She noted that current conditions, including a prolonged conflict, oil prices hovering at or above 100 U.S. dollars per barrel, and mounting inflationary pressures, have already activated the IMF’s “adverse scenario.”
In April, the IMF issued three scenarios for global GDP growth in 2026 and 2027, namely the main “reference forecast,” a middle “adverse scenario,” and a much worse “severe scenario.”
Under the adverse scenario, global growth would slow to 2.5 percent in 2026, while inflation would rise to 5.4 percent.
The reference scenario, which assumes a short-lived conflict, projects growth of 3.1 percent and inflation of 4.4 percent.
“This scenario, with every day that passes, is further and further behind in the rear-view mirror,” Georgieva said.
For the severe scenario forecast, global growth would be just 2 percent, with inflation hitting 5.8 percent.
