An escalating Middle East conflict risks leading to higher oil prices, a reversal of the recent fall in inflation and a puncturing of the optimistic mood in financial markets, the International Monetary Fund has warned.
- The Washington-based IMF said it was closely monitoring events in the region after Iran’s missile strike on Israel at the weekend and stressed the possibility that a war between the two countries could lead to higher interest rates.
Senior IMF officials used the launches of two reports – the World Economic Outlook (WEO) and the Global Financial Stability Review (GFSR) – to highlight the risks that a broader conflict would pose at a time when financial markets assume there will be a soft landing for the global economy comprising lower inflation, falling interest rates and the avoidance of recession.
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“Global geopolitical conflicts often stem from the insecurity and consequent social unrest experienced by large sections of the population, as well as from the loss of economic and political standing of some countries and regions of the world,” the governor said. “They are probably the most insidious threat to the post-war multilateral order.”
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Panetta Says Middle-East Conflict May Destabilize Energy Markets
, Bloomberg News
(Bloomberg) -- Bank of Italy Governor Fabio Panetta warned of the potential fallout should the war in the Middle East spread.
“There is a risk that the ongoing tragic conflict in the Middle East could end up destabilizing energy markets,” he said in Rome, where he is receiving an honorary degree.
“Global geopolitical conflicts often stem from the insecurity and consequent social unrest experienced by large sections of the population, as well as from the loss of economic and political standing of some countries and regions of the world,” the governor said. “They are probably the most insidious threat to the post-war multilateral order.”
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Statement by Governor Fabio Panetta to the Development Committee in Washington, D.C. - 19 April 2024
Annexes
(Bloomberg) -- Bank of Italy Governor Fabio Panetta warned of the potential fallout should the war in the Middle East spread.
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