Global Economy Endures War Shock—So Far

IMF Blog, June 15, 2026

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Publication: June 15, 2026.
More than three months into the war in the Middle East, the global economy appears to be holding up.
IMF will provide an updated analysis on July 8, in the next World Economic Outlook Update.
The IMF is on high alert and stresses that the current reassurance is "not complacency."

Oil prices are 30 percent higher than pre-war levels.
Oil prices rose significantly at the conflict’s outset but are lower than earlier peaks despite the straits’ prolonged closure.
Contributing factors to resilience:
- Some countries (example: China) have tapped deep oil reserves to cushion disruption.
- Increased production and refinery utilization outside the Gulf have contained price increases, though not fully offsetting the shock.
- Actions to dampen demand or limit price passthrough have mitigated impacts, but these measures have limits due to higher budgetary costs and external financing requirements.
- Headline inflation has picked up in many economies, but medium-term inflation expectations "generally remain well anchored."
- Government bond yields have climbed significantly since the war began, yet risk assets have rallied on strong earnings and financial conditions remain accommodative by historical standards.
- Strong technology-related investment—particularly in artificial intelligence and data centers—supports momentum in countries where it is concentrated (notably the United States and some Asian economies).

Geography, energy dependence, and limited policy space determine vulnerability.
Gulf oil exporters directly affected by the war face steep downward revisions to growth this year, with five out of eight countries seeing outright contractions.
Europe: heavily dependent on imported oil and gas; higher energy prices are weighing on growth and putting upward pressure on inflation; the ECB has recently raised interest rates.
Emerging market economies in Asia:
- Face relatively higher oil and gas intensity.
- Retail gasoline prices have increased 40 percent since the war began.
- Rising government bond yields, currency depreciation, and capital outflow pressures have amplified costs.
Africa:
- Many countries combine heavy reliance on energy imports with limited policy space; strain is especially visible.
- Several countries have been managing fuel shortages, including Ethiopia, Malawi, and Zambia.
- In Lesotho, Rwanda, and Tanzania, gasoline prices have increased by about half since the onset of the war.
- Higher energy prices have driven up fertilizer and food costs, increasing the risk of food insecurity; persistent disruptions could cause farmers in many low-income countries to struggle and may further fuel inflation for months to come.

The duration and intensity of the energy supply shock are critical determinants of future outcomes.
Infrastructure damage in the Middle East means supply will take time to recover.
Sunday’s ceasefire announcement is welcome, but should the conflict or disruptions intensify, there is clear risk to global growth.

Central banks: maintaining price stability is essential; some central banks have begun to tighten to keep inflation expectations anchored.
Fiscal policy:
- Fiscal discipline is important as borrowing costs rise.
- Price caps, subsidies, and similar interventions are costly; fiscal responses should be targeted, temporary, preserve price signals, and well-sequenced to protect the vulnerable without undermining public finances.
- Fiscal space is also needed to ensure AI-driven growth translates into shared prosperity, including addressing new vulnerabilities and investing in technology and people to prevent emerging and developing economies from being left behind.

Most member countries currently seek clear, candid policy guidance rather than financial support; IMF is providing tailored policy advice and capacity development.
For countries needing financial support, the IMF is stepping up and working with several countries, with forthcoming Executive Board proposals to adjust existing programs in response to the shock.
Country-specific IMF actions mentioned:
- The Gambia: requested an augmentation and program extension.
- Burkina Faso: reached staff-level agreement on a funding increase to address higher external financing needs.
- Ethiopia: IMF aims to bring forward financing to this year.
- Malawi: discussions initiated on a new program.
- Bangladesh: has requested a new program.
The IMF emphasizes tailored support reflecting differentiated member needs, aiming to help manage the shock and limit negative impacts, especially on the vulnerable.

Source: Kristalina Georgieva, "Global Economy Endures War Shock—So Far", June 15, 2026.