IMF calls for “carefully calibrated” measures to deal with impacts

The International Monetary Fund (IMF) warned this Monday, March 30, about the asymmetric impacts of the war in the Middle East across the world, which include energy prices, supply chains and financial conditions, calling on countries to adopt “carefully calibrated” measures.

In a publication on the institution’s blog, several IMF directors warn that the shock caused by the conflict in the Middle East and the closure of the Strait of Hormuz is “global, but asymmetric”.

“Energy importers are more exposed than exporters, poorer countries more than richer ones, and those with scarce reserves more than those with ample reserves”the text reads.

These impacts come at a time when many economies have limited room to absorb shocks, with many countries already facing record levels of debt, increasing concerns about budgetary sustainability.

Therefore, to manage the shock and maintain resilience, it is “more important than ever for countries to adopt appropriate policies”appeal to those responsible for the IMF, pointing out that the measures must be “carefully calibrated to each country’s specific needs”.

“Countries with limited reserves and little fiscal space should be especially cautious”warn the organization’s economists.

IMF officials admit that war could shape the global economy in different ways, but most scenarios lead to higher prices and slower growth.

“A short conflict could cause oil and gas prices to soar before markets adjust, while a long conflict could keep energy expensive and put pressure on countries that rely on imports.”consider those responsible, but the world can also “stabilize at an intermediate point with persistent tensions, expensive energy and difficult-to-control inflation”.

It all depends on how long the conflict lasts, how far it spreads, and how much damage it inflicts on infrastructure and supply chains.

In Europe, countries such as Italy and the United Kingdom are especially exposed by their dependence on gas plants for electricity production, while France and Spain are “relatively protected by greater nuclear and renewable energy capacity”.

As far as financial markets are concerned, in Europe and many emerging economies, “yields Higher and wider credit spreads increase debt service burdens and complicate refinancing for both governments and companies.”.