Global Finance Leaders Brace for Economic Fallout From Middle East War

IMF and World Bank meetings to address shocks to growth, inflation, and food security

Apr. 12, 2026 at 10:54am

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An abstract geometric illustration using bold shapes and primary colors to conceptually represent the economic challenges of declining growth, rising inflation, and food insecurity caused by the Middle East war.As global finance leaders convene, the economic fallout from the Middle East war casts a shadow over recovery efforts.Washington Today

Top finance officials from around the world will convene in Washington this week as the war in the Middle East delivers a third major shock to the global economy after the COVID pandemic and Russia's invasion of Ukraine. The IMF and World Bank are downgrading growth forecasts and raising inflation predictions, warning that emerging markets and developing countries will be hit hardest by higher energy prices and supply disruptions.

Why it matters

The war has compounded existing economic challenges, with many developing countries already facing lower buffers, higher debt vulnerabilities, and lower reserves coming out of the pandemic and Ukraine crisis. Multilateral institutions are racing to provide emergency support, but governments will have to balance fighting inflation with supporting growth and job creation.

The details

Before the Iran war broke out on February 28, the IMF and World Bank had expected to lift their growth forecasts given the resilience of the global economy. But the war has delivered a series of shocks that will slow progress on recovering growth and beating back inflation. The World Bank's baseline estimate now projects growth in emerging markets and developing economies of 3.65% in 2026, down from 4% in October, and inflation in those countries is now forecast to hit 4.9% in 2026, up from the previous estimate of 3%. The IMF warned that about 45 million additional people could face acute food insecurity if the war persists and continues to disrupt fertilizer shipments.

  • The IMF and World Bank meetings are scheduled for this week in Washington, D.C.
  • The Iran war began on February 28, 2026

The players

IMF

The International Monetary Fund, a global organization that provides financial assistance and policy advice to countries.

World Bank

A global development institution that provides loans and grants to developing countries to reduce poverty and promote sustainable development.

Ajay Banga

The President of the World Bank.

Donald Trump

The former President of the United States who imposed major tariffs beginning in 2021.

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What they’re saying

“Leadership matters, and we've come through crises in the past. But this is a shock to the system.”

— Ajay Banga, President, World Bank

“You're trying to operate on consensus when there's no consensus in the world right now on anything.”

— Josh Lipsky, Chair of International Economics, Atlantic Council

What’s next

The IMF and World Bank are expected to release updated economic forecasts and detail their plans for providing emergency support to vulnerable countries during the meetings this week.

The takeaway

The war in the Middle East has compounded existing economic challenges, forcing the IMF and World Bank to downgrade growth forecasts and increase inflation projections, especially for emerging markets and developing countries. Multilateral institutions will need to work with governments on targeted relief efforts while also pushing for reforms to address long-term debt vulnerabilities.