IMF Sounds the Alarm: Attacks on Iran Threaten Global Economy
23 June 11:48
A US strike on Iran’s nuclear facilities could have much broader implications than just a spike in energy prices, according to International Monetary Fund Managing Director Kristalina Georgieva. In an interview with Bloomberg, she said that the move only adds uncertainty to an already difficult global economic situation, "Komersant Ukrainian" reports
“We see this situation as another source of uncertainty in an already uncertain environment,” Georgieva said.
According to her, the main blow has so far fallen on energy prices, but secondary effects are also possible, in particular due to falling growth forecasts in major economies.
Oil reacts instantly
The first consequence is oil prices. On Monday morning, the global benchmark Brent rose by 5.7% to $81.40 per barrel before partially pulling back in the face of active trading.
The IMF is closely monitoring price fluctuations, but also warns of possible secondary and tertiary effects. If the situation escalates, it could hit the growth rates of large economies, which in turn would trigger a downward revision of global growth forecasts.
“If we see additional turbulence that affects growth prospects, it will have a domino effect across the global economy,” the IMF chief said.
The world is waiting for Iran’s response
Tensions in the world have risen after the United States struck Iran’s nuclear facilities with bunker-busting bombs. This decision by President Donald Trump sharply increased geopolitical risks in the region and caused concern among governments and traders.
The IMF separately analyzes how this conflict will affect risk premiums in the energy sector, especially in oil and gas supplies.
Options trading volumes have surged, and the futures curve has shifted, reflecting fears of supply shortages.
“We’ll see how things develop,” she said, adding that the focus is now on possible logistical disruptions and risks to other countries.
“I pray that this will not happen,” Georgieva added.
What about the US economy?
Speaking about the U.S. economy, Georgieva noted that disinflation continues, but the Federal Reserve is not ready to cut the discount rate at this time.
However, the situation may change by the end of the year:
“We expect that at the end of the year the Fed may conclude that it is time to cut the rate,” she explained.
At the same time, a stable labor market and rising wages remain a positive factor, supporting consumer demand.
However, Georgieva warns that the more turbulence there is, the worse the conditions for business.
“When uncertainty increases, what happens? Investors don’t invest, consumers don’t spend money, and this hinders economic growth,” she summarized.
