The war against Iran threatens to cause “a global but asymmetric shock”, affecting the prospects of economies barely recovering from previous crises, warns the International Monetary Fund (IMF), according to Bloomberg.
Several countries in Africa and Asia, which are heavily dependent on oil imports, are having more and more problems in securing the necessary quantities, “even at inflated prices”, according to a post published on the blog of the international financial institution on Monday, according to Agerpres.
“All roads lead to higher prices and slower economic growth,” the IMF points out. The final impact on supply chains and infrastructure will depend on the duration of the conflict, the institution says.
Brent crude rose to $115 a barrel on Monday, marking a record high this month, as US troops arrive in the Middle East. President Donald Trump repeated his threats to destroy Iran's energy assets if the Strait of Hormuz is not reopened soon, raising concerns about a further escalation of the war that began on February 28, Bloomberg writes.
“Any sudden increase in prices is not only an economic problem, but also a socio-political one”
Beyond disruptions in energy supplies, higher food and fertilizer prices are affecting some countries from the Middle East to Latin America, with low-income economies at risk of food insecurity, the IMF warned. The disruption of fertilizer supplies from the Persian Gulf comes just as the northern hemisphere's planting season begins, threatening year-round agricultural crops.
“People in low-income countries are most at risk when food prices rise, as they account for about 36 percent of their consumption on average, compared to 20 percent in emerging economies and 9 percent in advanced economies. This means that any sharp increase in fertilizer and food prices is not only an economic problem, but also a socio-political one, especially where fiscal resources to absorb the impact are limited,” the IMF blog post said. written by economists such as Tobias Adrian and Jihad Azour.
The fund will publish a detailed report on the global economic outlook next month, when finance ministers and central bank governors gather in Washington for the spring meetings of the IMF and the World Bank.
