IMF warns escalation of Middle East crisis could trigger new inflation shock ... trends now
The IMF has warned that escalation in the Middle East could trigger a new inflation shock.
In its latest assessment of the global economy, the international body welcomed the 'remarkable resilience' of the last two years.
The report pointed to a broadly improving picture for the UK, although it marginally reduced forecasts for growth this year and next.
But the IMF raised concerns that tensions in the Middle East and the Ukraine war risked pushing up food and energy prices again.
The IMF said the global economy has had an 'eventful' journey in the years since the Covid-19 pandemic.
The IMF's predictions for the UK have been notoriously volatile, but it expects growth to hit 0.5 per cent this year, a slight downgrade from the 0.6 per cent growth it had forecast in January
Russia's war in Ukraine triggered a global energy and food crisis, and a surge in inflation, followed by central banks around the world hiking interest rates.
Pierre-Olivier Gourinchas, the IMF's director of research, said: 'Yet, despite many gloomy predictions, the world avoided a recession, the banking system proved largely resilient, and major emerging market economies did not suffer sudden stops.'
Current risks to the global outlook are more or less balanced, meaning there could be both positive and negative surprises that skew forecasts, according to the IMF.
In terms of threats, the economists warned that the Israel-Hamas conflict could escalate further into the Middle East, while continued attacks on ships in the Red Sea and the ongoing war in Ukraine risk new price hikes.
This could see food, energy and transport costs spike around the world, with lower-income
