IMF, Australia warn US–Iran conflict could trigger global instability

Australian Minister of Finance Jim Chalmers has warned that the war between the United States, Israel, and Iran has launched the global economy into a “really dangerous time.”

Chalmers told reporters on April 15 that the International Monetary Fund’s (IMF) downgraded global growth outlook reflects the economic consequences of the conflict, driven largely by the near-total disruption of the Strait of Hormuz, Caliber.Az reports, citing CNN.

With shipping through the strategic waterway heavily restricted, shortages have emerged in key commodities including crude oil, natural gas, and fertilisers, contributing to rising fuel and food prices.

On April 14, the IMF said it expects global growth of 3.1% and inflation of 4.4% if the conflict remains short-lived.

However, it warned that a prolonged closure of the Strait could reduce growth to around 2%, pushing the global economy close to recession.

“The IMF is sounding the alarm on some pretty severe scenarios,” Chalmers said.

According to him, this is a very serious, very dangerous time for the world.

“Now, Australia is better placed and better prepared than a number of other countries, but we won’t be spared the fallout from this very substantial economic shock,” he added.

Chalmers is travelling to Washington for a G20 finance ministers’ meeting and talks with IMF and World Bank officials, where he said he will join calls for an end to the war.

“ From an economic point of view, the end of the war can’t come soon enough, but even when the strait is properly reopened and even when the hostilities formally end in an enduring way we still expect the consequences of this war in the Middle East to be felt for some time now,” he emphasised.

By Bakhtiyar Abbasov