US-Iran escalation threatens to lower global growth outlook, says IMF

Kristalina Georgieva, The Managing Director of the International Monetary Fund (IMF)

International Monetary Fund’s (IMF) Managing Director Kristalina Georgieva warned that US strikes on Iran could potentially trigger broader impacts beyond the energy markets, as global uncertainty escalates.

“There could be secondary and tertiary impacts,” Georgieva told Bloomberg.

“Let’s say there is more turbulence that goes into hitting growth prospects in large economies — then you have a trigger impact of downward revisions in prospects for global growth.”

She added that the IMF’s current focus is on how the ongoing tensions may affect risk premiums in oil and gas markets, the potential for disruptions in energy supply routes, and the possibility of the conflict spreading to other countries.

As for the US economy, Georgieva expects inflation to continue easing. However, she noted that the Federal Reserve is not yet in a position to cut interest rates, citing the strength of the labor market.

The remarks come at a time of heightened uncertainty in the global economy, following escalating trade tensions and the recent US strikes on Iranian nuclear facilities, which have left markets and governments on high alert amid anticipation of a potential response from Tehran.