Historically, sustained increases in oil prices have tended to raise inflation and reduce economic growth. Low-income countries face a special risk of food insecurity; some may need more external support, even as such assistance has declined," the organization highlighted.
Outlining some of the effects being seen in the global economy as a result of the attacks by the United States and Israel on Iran, the IMF explained that this disruption in fertilizer supplies "is occurring just as the planting season begins in the Northern Hemisphere, threatening yields and harvests throughout the year and driving up food prices".
A more complete assessment of the economic consequences of this conflict will be released in mid-April, when the organization publishes its reports on the World Economic Outlook, Global Financial Stability, and Fiscal Monitor.
"This turns any sudden rise in fertilizer and food prices into not just an economic problem, but also a socio-political one," the IMF noted.
But a month after the United States and Israel decided to open another front in the region—besides the covert and orchestrated genocide against the Palestinian people, respectively—the international financial body warns of the effects being recorded in energy, trade, and finance, as the transit of ships through the Strait of Hormuz has dropped from an average of 100 daily to practically nothing.
It is not only the number of vessels transiting this 160-kilometer-long and 33-kilometer-wide maritime passage at its narrowest point, but also their cargo.
For now, the IMF emphasized that "the war means higher prices and slower growth".
The rising cost of food is one of the main concerns because in low-income countries, around 36% of household consumption is spent on this; above the 20% it represents for developing economies and the 9% for advanced ones.
The effect for fuel-importing economies is a "sudden and considerable tax," the organization pointed out.
Global Shock
While "the world is facing a new shock," it is "asymmetrical," the IMF acknowledged.
According to the International Energy Agency, cited by the IMF, "the de facto closure of the Strait of Hormuz and damage to regional infrastructure have caused the greatest disruption to the world oil market in history".
"Energy importers are more exposed than exporters, poorer countries more than richer ones, and those with scarce reserves more than those with ample ones," the body summarized.
It detailed that for energy-importing economies in Africa, the Middle East, and Latin America, the pressure comes from higher costs of buying abroad, which are added to already limited fiscal margins and external reserves.
The IMF notes that between 25 and 30% of the world's oil passes through it, as well as 20% of the liquefied natural gas, which supplies not only Asia but also parts of Europe.
Energy is the main transmission channel to the global economy.
This is a result of the disruption in fertilizer shipments, of which about one third passes through the Strait of Hormuz.
"If high energy and food prices persist, they will drive up inflation globally.
A month after the United States and Israel attacked Iran, the International Monetary Fund (IMF) warned that beyond the effects on energy, financial markets, and supply chains, "concern is growing over food prices".
Low-income countries are at a particular risk of food insecurity as a result of the conflict in the Middle East.
In major Asian manufacturers, the rising cost of fuel and electricity is increasing production costs and eroding the population's purchasing power.
And in Europe, the ghost of the 2021-2022 gas crisis is re-emerging, with countries like Italy and the United Kingdom particularly exposed.
