The International Monetary Fund (IMF) has stated that recent attacks by the U.S. and Israel on Iran, along with Iran's response, have increased uncertainty regarding the global economic outlook.
The IMF is closely monitoring the "highly fluid" situation in the Middle East, emphasizing that it is too early to definitively assess the economic impact on the region and the world. The duration and extent of the conflict will be key factors.
This comes after the IMF had previously raised its global growth forecast for the year to 3.3% in January, but had also cautioned about potential faltering activity due to rising trade barriers and intensifying geopolitical conflicts. Energy prices have already surged, leading to concerns about a potential revival in inflation and a slowdown in growth for energy-importing nations.
Government bond yields have also risen, which could increase borrowing costs. The IMF noted disruptions to trade, economic activity, energy prices, and financial market volatility.
Increased uncertainty may also dampen consumer spending and business investment.
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