‘All roads’ from Iran war lead to higher prices and slower growth, warns IMF

War in the Middle East is having an uneven impact on global economies but “all roads” lead to higher prices and slower economic growth, an influential economic body has warned.

The International Monetary Fund (IMF), which advises on policy and gives financial aid to member countries, said it was stepping up support, especially to the most vulnerable economies.

The war’s impact is “both global and highly uneven”, with some countries likely to face a renewed cost-of-living squeeze, IMF economists wrote in a blog post on Monday.

Large energy importers in Asia and Europe are bearing the brunt of higher fuel prices and input costs due to the effective closure of the Strait of Hormuz, which has caused shipments of oil and gas to grind to a halt.

Countries like the UK and Italy have been particularly exposed by their reliance on gas-fired power, while France and Spain were relatively protected by their greater use of nuclear and renewable energy sources, according to the IMF.

The organisation also warned of mounting concerns about food prices shooting up because of disruption to shipments of fertiliser from the Middle East.

“The interruption of crop-nutrient supplies from the Gulf comes just as planting season begins in the Northern Hemisphere, threatening yields and harvests through the year and pushing food prices higher,” it said.

The most vulnerable countries will “bear the heaviest burden”, with people in low-income countries spending a bigger proportion of their incomes on food.

“Although the war could shape the global economy in different ways, all roads lead to higher prices and slower growth,” the IMF warned.

The ultimate impact depends on how long the war lasts and how much damage it does to infrastructure and supply chains, but the world may “settle somewhere in between – tensions linger, energy stays costly, and inflation proves hard to tame”, it wrote.

The IMF said it was supporting member countries, of which it has around 190, with policy advice and, where needed and co-ordinated with the international community, financial assistance.