By Andrea Shalal
WASHINGTON, March 30 (Reuters) – The war in the Middle East has caused serious disruption to the economies of frontline countries, and is dimming the outlook for many economies that had just started to recover from previous crises, the International Monetary Fund warned on Monday.
In a blog published by the global lender’s top economists, the IMF said the war launched by U.S. and Israeli strikes against Iran on February 28 was causing a global, but asymmetric shock and leading to tighter financial conditions.
Iran’s closure of the Strait of Hormuz and damage to regional infrastructure had caused the largest disruption to the global oil market in history, according to the International Energy Agency. Much would depend on how long the war lasts, how far it spreads and how much damage it inflicts on infrastructure and supply chains.
The IMF said low-income countries were at particular risk of food insecurity, given higher food and fertilizer prices, and may need more external support at a time when many advanced economies were scaling back their international assistance.