Yemisi Izuora
Key global finance institutions are reassessing the impact of Middle East conflict and would continue to address structural problems arising from the crises.
Heads of the International Energy Agency, International Monetary Fund, and World Bank Group as part of the coordination group had earlier established in early April measures to maximize their institutions’ response to the energy and economic impacts of the war in the Middle East.
They promised to continue to monitor closely and assess the impact of the war on energy markets, the global economy and individual countries, and to coordinate our response and support to our member countries—working with, and drawing on, other international organizations’ expertise as needed to lay the foundations for a resilient recovery that delivers stability, growth and jobs.”
At the end of that meeting, they issued the following statement:”As we noted earlier this month, the impact of the war is substantial, global, and highly asymmetric, disproportionately affecting energy importers, in particular low-income countries. The shock has led to higher oil, gas and fertilizer prices, triggering concerns about food security and job losses as well. Some oil and gas producers in the Middle East have also seen a dramatic loss of export revenue.
The situation remains very uncertain, and shipping through the Strait of Hormuz is yet to normalize. Even after a resumption of regular shipping flows through the Strait, it will take time for global supplies of key commodities to move back towards their pre-conflict levels—and fuel and fertilizer prices may remain high for a prolonged period given the damage to infrastructure. Due to supply disruptions, shortages of key inputs are likely to have implications for energy, food, and other industries. The war has also forcibly displaced people, impacted jobs, and reduced travel and tourism, which may take time to reverse.
They shared their latest assessments, ahead of the release in April 14, of the IEA’s monthly Oil Market Report and IMF’s World Economic Outlook. They also discussed the situations of the countries most affected by the shock as well as the responses by our institutions.
Their teams are working closely, including at country level, to leverage respective expertise and help countries through tailored policy advice and, in the case of the IMF and World Bank, financial support where needed.