11 nations urge ‘coordinated’ economic support amid Mideast war
London—The finance ministers of 11 countries, including Britain and Japan, called Wednesday for “coordinated emergency support” to help countries hit by disruptions from the war in the Middle East.
“We call on the IMF (International Monetary Fund) and World Bank to provide a coordinated emergency support offer for countries in need, tailored to country circumstances and drawing on the full range and flexibility of their toolkits,” the ministers said in a joint statement issued by the UK government.
“Renewed hostilities, a widening of the conflict or continued disruption in the Strait of Hormuz would pose serious additional risks to global energy security, supply chains, and economic and financial stability,” said the statement.
“Even with a durable resolution of the conflict, impacts on growth, inflation and markets will persist.”
“We reaffirm our unwavering support for Ukraine and our determination to maintain economic pressure on Russia,” it said.
Gloomy forecast
“Russia’s war in Ukraine, now in its fifth year, continues to negatively impact the global economy. Russia must not benefit from this conflict, and as market conditions allow to avoid exacerbating disruptions to supply chains and energy prices, we will continue collaborating on ways to increase pressure.”
The countries that signed the statement were Australia, Finland, Ireland, Japan, the Netherlands, New Zealand, Norway, Poland, Spain, Sweden and United Kingdom.
The IMF on Tuesday cut its 2026 outlook for the global economy due to the US-Israeli war on Iran, warning that disruptions in commodity markets are driving up energy and food prices, with developing countries hit hardest.
Under what it labels a “reference forecast,” based on a scenario in which the war lasts a few more weeks before the roiled markets stabilize by mid-year, the IMF projected global growth of 3.1 percent this year, down from the 3.3 percent it forecast in its previous key quarterly report.
The downward revision is relatively modest, but the IMF said its worst-case estimate would see global growth for 2026 reduced by 1.3 percentage points, a level that would mean a “close call” for a recession.
Major energy crisis
Highlighting that if not for the onset of the war, world growth would have been revised upward to 3.4 percent on the back of massive investments in artificial intelligence, the IMF said the outlook is increasingly uncertain amid the fluidity of the situation in the Middle East.
“The global economic impact will crucially depend on the conflict’s duration, intensity, and scope, which are inherently unpredictable,” it said in the latest World Economic Outlook report, while cautioning that commodity-importing emerging and developing economies are particularly likely to suffer.
IMF chief economist Pierre-Olivier Gourinchas told a press conference that the war launched in late February, resulting in the closure of the Strait of Hormuz and serious damage to critical infrastructure in the Middle East, has “raised the prospect of a major energy crisis, should a durable solution not be found soon.”
The economist said the world appears to be “drifting closer toward” the IMF’s “adverse” scenario, a middle projection under which the global economy would see 2.5-percent growth this year, as opposed to its more optimistic forecast of 3.1 percent.
Global growth
Under the reference forecast, the IMF maintained its 2027 global growth forecast at 3.2 percent.
The US economy is expected to expand 2.3 percent in 2026, backed by its supportive fiscal policy and the emergence of effects from last year’s interest rate cuts. It is only 0.1 point lower than the IMF’s January forecast.
In the following year, the world’s largest economy is expected to grow 2.1 percent, receiving a 0.1-point upward revision.
The euro area’s economy is projected to grow 1.1 percent this year and 1.2 percent next year, with both figures given a 0.2-point downward adjustment.
Meanwhile, growth in emerging and developing Asia is expected to fall from 5.5 percent last year to 4.9 percent this year, the IMF said.
While many Asian countries have been reeling from the energy crunch caused by the war and the near-total stoppage of shipping in the Strait of Hormuz, the international organization reduced its estimate for China’s 2026 growth by only 0.1 point to 4.4 percent.
