The International Monetary Fund (IMF) has warned that the ongoing war in the Middle East would push up prices and weaken economic growth, with the poorest countries bearing the brunt of the shock.

In a blog post published on its website yesterday, the Fund said the conflict is affecting the global economy through three main channels — energy supply, trade disruptions and financial market stress, with impacts already spreading across regions.

It identified energy as the most immediate and severe impact point. Disruptions around the Strait of Hormuz, a key route for global oil and gas shipments through which roughly 25 to 30 per cent of global oil and 20 per cent of liquefied natural gas flows, have significantly reduced supply, triggering sharp increases in energy prices.

For fuel-importing countries, the effect is direct, raising costs for governments, businesses and households. Several economies in Africa, Asia and Latin America are already struggling to secure supplies at higher prices.

While oil exporters may benefit from price increases, the IMF noted that gains are uneven, particularly where exports are constrained. It added that prolonged uncertainty could weaken investment and slow growth even in producing countries.

Beyond energy, the conflict is disrupting global supply chains. Rerouting of ships away from conflict zones has increased freight and insurance costs, while delivery times have slowed.

The IMF highlighted fertiliser supply as a key concern, noting that a significant share of global shipments passes through the Gulf region. Any sustained disruption could reduce agricultural output and push food prices higher.

This poses a greater risk for low-income countries, where households spend a larger share of income on food, making them more vulnerable to price increases.

The disruption is also affecting other critical inputs and trade flows, with knock-on effects on industries and economies linked to the region.

The Fund warned that the conflict threatens recent progress made in reducing inflation globally.

Higher energy and food prices are expected to feed into broader costs, raising inflation while slowing economic activity. In some regions, there are concerns that persistent price increases could affect expectations, making inflation harder to control.

The IMF also reported increased volatility in global financial markets, with falling equity prices and rising borrowing costs.

Tighter financial conditions are putting pressure on developing economies, especially in sub-Saharan Africa and parts of Asia and the Middle East, where countries face higher import bills and limited access to financing. Rising debt levels and weaker currencies are adding to the strain, particularly for countries with limited fiscal buffers.

The IMF said many countries entered the crisis with high debt and constrained fiscal space, limiting their ability to cushion the impact.

It urged policymakers to adopt targeted and cautious responses, while noting that it is scaling up support for vulnerable countries through financing and policy guidance.

The Fund added that a more detailed assessment of the global impact will be provided in its upcoming economic reports in April.