The escalation of the war in Iran risks plunging the global economy into a recession, warns the International Monetary Fund. Moreover, major players in financial markets say that a critical scenario – the blocking of the Strait of Hormuz – would inevitably lead to a global contraction.
Signals are coming from two different directions, but converge on the same conclusion: the global economy is becoming extremely vulnerable to the energy shock, reports The Guardian.
IMF: the world is approaching a scenario of global recession
In the most recent update of the World Economic Outlook, the IMF warns that an escalation of the conflict could push the global economy "to the edge" in terms of a recession - a rare scenario that has occurred only a few times since 1980.
The institution describes three scenarios. In the baseline scenario, where the effects of the war moderate by mid-2026, global growth would slow to 3.1%.
However, in a negative scenario, with high energy prices, growth would drop to 2.5%, and inflation would rise to over 5%. In the severe scenario, with a prolonged conflict and oil above $110 a barrel, the global economy would slow to around 2% - a threshold considered equivalent to global recession.
IMF Chief Economist Pierre-Olivier Gourinchas warns that each day of conflict pushes the global economy towards this negative scenario.
Market warning: blocking of Hormuz would make recession inevitable
At the same time, similar warnings are coming from the private financial sector.
Ken Griffin, head of Citadel fund, says that a prolonged closure of the Strait of Hormuz - one of the most important routes for oil transportation - would inevitably trigger a global recession.
"Let's assume the strait remains closed for the next six to twelve months, the world will enter a recession. There is no way to avoid this," Griffin said, quoted by Agerpres.
The blockade of this route would particularly affect Asian economies and generate a rapid shock to energy prices, with cascading effects on inflation and consumption.
UK, the most exposed in the G7
According to the IMF, the impact will not be uniform. The United Kingdom is set to be the most affected economy in the G7.
The institution has lowered its growth forecast for the British economy to 0.8% and warns that inflation could reach nearly 4%, double the official target.
UK Finance Minister Rachel Reeves reacted strongly, criticizing Washington's decision to engage in the conflict. She said that the war "is not ours, but it will have a cost," adding that she is "frustrated and angry" due to the lack of a clear exit plan from the conflict.
Oil, the decisive factor
The price of oil has returned to around $95-100 per barrel, after surpassing this threshold following tensions in the region. The evolution reflects hopes for negotiations, but also high volatility.
The IMF warns that energy-importing economies and developing countries are the most exposed. At the same time, analysts say that markets do not yet fully reflect the risk of a major escalation.
The only solution: stopping the conflict
In the IMF's assessment, the most effective way to limit the economic impact remains to stop the war.
In the absence of this scenario, central banks will be forced to maintain high interest rates to control inflation, and governments will have limited room for intervention due to high debt levels.
The institution also warns of the risk of popular measures, such as price caps or widespread subsidies, frequently used by governments in times of crisis. Although politically attractive, these are often poorly calibrated and involve high budgetary costs without efficiently reaching those most affected.
Instead, the IMF recommends temporary and well-targeted interventions, as many countries are already entering this turbulent period with high levels of public debt, limiting their room for maneuver.
G.P.