Prolonged war, renewed disruptions pose biggest risk to Middle East region, IMF says

Prolonged war in the Middle East and further disruptions to energy production, shipping routes or critical infrastructure pose the biggest risk to economies in the Middle East and Central Asia, the International Monetary Fund said on Thursday.

Jihad Azour, the IMF's director for the Middle East and Central Asia, told reporters the war was imposing a highly uneven economic shock to the broader region, with directly affected states under severe pressure.

"The outlook depends critically on how quickly energy production and trade ⁠normalize, and on countries’ ability to preserve macroeconomic stability," Azour said at a news conference during the annual meetings of the IMF and World Bank in Bangkok. The IMF will release a fuller outlook for the region on October 22.

Pre-war surpluses, alternative routes, demand adjustments and substantial inventory drawdowns had helped contain the impact of the energy shock caused by the U.S.-Israeli-led attacks on Iran and Tehran's subsequent closure of the Strait of Hormuz.

"These buffers bought time, but they are finite. Inventories are lower, spare capacity is tighter, and renewed disruption could generate much larger price adjustments," he said.



Reuters