Rising energy and fertiliser costs spark fears of food shortages, inflation, and job losses worldwide…..
The International Monetary Fund and World Bank Group have pledged coordinated financial and policy support for countries hit hardest by the ongoing Middle East conflict, as surging energy and fertiliser prices ripple across the global economy.
The commitment followed a high-level meeting with the International Energy Agency on the sidelines of the ongoing Spring Meetings in Washington, DC, where global financial leaders are grappling with the widening economic fallout from the crisis.
The conflict, now in its sixth week, has significantly disrupted economic activity across the Middle East and beyond.
Tensions escalated after Iran launched retaliatory strikes on U.S. military bases across the region, following earlier joint attacks by the United States and Israel. Explosions were reported in key cities including Abu Dhabi, Manama, Doha, Kuwait City, and Riyadh.
Since then, global energy markets have been thrown into turmoil.
Oil and gas prices have surged sharply, driven by attacks on production infrastructure and restrictions on shipments through the critical Strait of Hormuz, a key artery for global energy supply.
Energy Crisis Fuels Inflation and Food Risks
The IMF and World Bank warned that the surge in oil, gas, and fertiliser prices is already triggering broader economic stress, particularly in vulnerable economies.
They cautioned that:
- Food security risks are rising due to higher fertiliser costs
- Inflationary pressures are intensifying globally
- Job losses could follow as industries struggle with rising input costs
The institutions stressed that the impact is uneven, with low-income and energy-importing countries bearing the brunt of the crisis.
Supply Disruptions May Linger
Although efforts are underway to stabilise shipping through the Strait of Hormuz, officials warned that a return to normal supply levels will take time even if transport routes fully reopen.
Damage to infrastructure and ongoing uncertainty mean that fuel and fertiliser prices could remain elevated for an extended period.
This, in turn, is expected to affect multiple sectors, from agriculture to manufacturing, as shortages of critical inputs begin to bite.
Global Support Efforts Intensify
In response, the IMF and World Bank said their teams are already working closely with affected countries, offering:
- Tailored policy advice
- Financial assistance where necessary
- Technical support to manage economic shocks
“Our teams are working closely… to help countries through tailored policy advice and financial support where needed,” the institutions said in a joint statement.
They also pledged to deepen coordination with other global organisations to strengthen response efforts and support recovery.
Broader Economic Fallout
Beyond energy and food, the war is also disrupting livelihoods in other ways.
The institutions noted that:
- Population displacement is increasing
- Employment opportunities are shrinking
- Travel and tourism sectors have been hit
These effects could take significantly longer to reverse, even after hostilities ease.
Clouded Global Outlook
The IMF signalled that it will downgrade its global growth forecast in its upcoming World Economic Outlook report, warning that the crisis could further darken the economic outlook.
Rising inflation, tighter financial conditions, and ongoing geopolitical uncertainty are expected to weigh heavily on global growth prospects.
Despite the challenges, the IMF, World Bank, and IEA emphasised their commitment to a unified response.
They pledged to continue monitoring the evolving situation and to work together alongside other international partners to support member countries and lay the groundwork for recovery.
Their goal, they said, is to help economies navigate the crisis while building resilience for the future ensuring stability, restoring growth, and protecting jobs in an increasingly uncertain world.
