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TEMPO.CO, Jakarta - International Monetary Fund (IMF) Managing Director Kristalina Georgieva warned on Monday, May 4, that the global economy would face "much worse consequences" if the war in the Middle East drags on until 2027, with oil prices reaching around US$125 per barrel.
"We are going to see inflation climbing up, and then inevitably, inflation expectations would start de-anchoring," he said at a conference organized by the Milken Institute in Washington DC, United States, as quoted by ANTARA.
Georgieva said that the current conditions, including the ongoing conflict, oil prices remaining at or above US$100 per barrel, and rising inflationary pressures, have triggered the IMF's "bad scenario."
In April, the IMF released three scenarios for global gross domestic product (GDP) growth in 2026 and 2027: a main “benchmark projection,” a medium-level “adverse scenario,” and a much worse “severe scenario.”
In the worst-case scenario, global growth would slow to 2.5 percent in 2026, and inflation would rise to 5.4 percent. The benchmark scenario assumes a brief conflict and projects growth of 3.1 percent and inflation of 4.4 percent.
"This scenario, with every day that passes, is further and further behind in the rear-view mirror," Georgieva said.
In the severe scenario, global growth is estimated to reach only two percent, while inflation is expected to reach 5.8 percent.
Read: Global Oil Prices Ease to $104 a Barrel After Recent Surge
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