International Monetary Fund (IMF) Managing Director Kristalina Georgieva on Monday warned that the ongoing conflict in the Middle East could pose fresh risks to global inflation if oil prices remain elevated for a prolonged period.
Speaking at a symposium hosted by Japan’s finance ministry, Georgieva said geopolitical tensions in the region were already testing the resilience of the global economy.
“We are seeing resilience tested again by the new conflict in the Middle East," Georgieva said, according to Reuters.
She cautioned that energy prices could have a significant impact on inflation if the crisis leads to sustained disruptions in oil markets.
Georgieva noted that a 10 per cent increase in oil prices that persists through most of the year could raise global inflation by around 40 basis points.
“My advice to policymakers in this new global environment is to think of the unthinkable and prepare for it," she said.
Her warning comes as global energy markets face uncertainty following the escalation of tensions involving Iran, the United States and Israel, raising concerns about disruptions to key oil supply routes.
PROLONGED CRISIS MAY IMPACT ECONOMY: FINANCE MINISTRY REPORT
A report by India’s Finance Ministry has also cautioned that a prolonged crisis in the Middle East could have wider economic implications, including pressure on the exchange rate and rising inflation due to higher petroleum prices, news agency PTI reported.
According to the Monthly Economic Review for February, released by the ministry, the conflict has already disrupted shipping through the Strait of Hormuz, the world’s most critical oil chokepoint that handles about 20 per cent of global oil flows.
Source: World News in news18.com, World Latest News, World News
