Online Reporter
International Monetary Fund Managing Director Kristalina Georgieva warned that the US strikes on Iran could potentially have broader impacts beyond energy channels, as global uncertainty escalates.
“We are looking at this as another source of uncertainty in what has been a highly uncertain environment,” said Georgieva in an interview with Bloomberg TV on Monday.
The biggest shock so far has been seen in energy prices, which the IMF is watching closely, but “there could be secondary and tertiary impacts.
Let’s say there is more turbulence that goes into hitting growth prospects in large economies, then you have a trigger impact of downward revisions in prospects for global growth.”
Global benchmark Brent surged as much as 5,7 percent to US$81,40 a barrel early in Asia Monday, before paring much of that gain in heavy trading.
The IMF already downgraded its global growth prospects for this year in April, when it warned that the US-led world trade “reboot” would slow growth.
Georgieva said the first two quarters this year have shown that trend holding, and while the world will likely avoid a recession there’s also higher uncertainty, which has a tendency to hold down growth prospects.
The world is bracing for Iran’s response after unprecedented US airstrikes on the country’s nuclear facilities set traders and governments worldwide on edge.
President Donald Trump’s decision to deploy bunker-busting bombs to hit sites in Iran pushed the Middle East into uncharted territory and raised geopolitical risks at a time when the world economy was already facing severe uncertainty over trade tensions.
More immediately, Georgieva said the IMF is looking particularly at how the unfolding conflict will impact oil and gas risk premia. — Bloomberg
