The Middle East conflict has completely disrupted the recovery! The IMF and World Bank Spring Meetings are overshadowed: high inflation and low growth are now inevitable.
2026-04-13 14:13:59
The smoke of war in the Middle East, threatening to erupt in April 2026, is rapidly spreading to the heart of the global financial stage. The International Monetary Fund (IMF) and the World Bank (WB) are scheduled to hold their highly anticipated Spring Meetings in Washington this week, bringing together top financial officials from around the world to discuss paths to economic recovery. However, the sudden outbreak of war in Iran has cast a massive storm over the entire meeting, shrouding it in the heavy shadow of economic deterioration. This is yet another major systemic shock to the global economy, following the COVID-19 pandemic and the 2022 Russia-Ukraine conflict. The war has not only disrupted the stability of energy and supply chains but also directly threatened the very foundations of emerging markets and developing countries, bringing the previously resilient global economic recovery to an abrupt halt.
Senior officials from the IMF and World Bank made it clear last week that they would significantly lower their global economic growth forecasts while raising their inflation forecasts due to the ongoing Middle East conflict. This shift came as abruptly as the outbreak of the war in Iran on February 28th. Prior to this, given the strong resilience of the global economy, both institutions had planned to raise their growth forecasts, believing the recovery was stabilizing. However, the sharp rise in energy prices and supply chain disruptions caused by the war completely altered this optimistic outlook. The surge in energy costs directly increased production and transportation expenses, while the supply chain disruptions further slowed global trade flows, forcing the previously anticipated moderate recovery trajectory into a downward spiral. Experts unanimously warn that this shock will hit emerging markets and developing countries the hardest, as these countries are often highly dependent on energy imports and have relatively weak fiscal buffers.
The World Bank's latest forecast shows that emerging market and developing economies are expected to grow by only 3.65% in 2026, a significant downward revision from the 4% forecast last October. If the war lasts longer than expected, this figure could even fall further to 2.6%, meaning that the engine of global economic growth will face a serious risk of stalling.
At the same time, the inflation situation is equally worrying. The World Bank predicts that the inflation rate in these economies will reach 4.9% in 2026, far higher than the previous forecast of 3%; in the worst-case scenario, this figure could soar to 6.7%.
The rapid rise in inflation not only erodes people's real purchasing power but also exacerbates business operating costs, suppressing investment and consumer demand, creating a vicious cycle. The IMF has also issued a similar warning, emphasizing that the continued disruption of fertilizer transportation by war will directly lead to the breakdown of food production chains, further pushing up global food prices.
With public debt levels already at record highs, emerging markets and developing countries are facing a triple challenge: increasing debt, deteriorating food security, and slowing economic growth.
The IMF specifically pointed out that if the war continues to disrupt the transport of key agricultural inputs such as fertilizers, an additional 45 million people worldwide will face severe food shortages. Behind this figure lies the harsh reality that countless families may be plunged into hunger and poverty. Faced with extremely tight fiscal budgets, the IMF and the World Bank are going all out to address this latest crisis, providing emergency support to the most vulnerable countries.
The IMF estimates that $20 billion to $50 billion in emergency aid will be needed in the short term to help low-income countries and energy-importing nations weather the crisis.
The World Bank stated that it could raise approximately $25 billion in the short term using existing crisis response tools, and could expand the aid to up to $70 billion within six months if necessary.
However, economists strongly urge governments to take targeted temporary measures to alleviate price pressures, as any overly broad subsidies or interventions could further fuel inflation and create new economic risks.
In an interview, World Bank President Angela Pennant emphasized: "Leadership is crucial, and we have successfully weathered many crises in the past."
He highly praised the efforts made by various countries in fiscal and monetary policy regulation, but also admitted that this crisis is a comprehensive shock to the entire global economic system, unlike any previous one.
The current international landscape has undergone profound changes: relations between the United States and major Asian powers remain tense, and the G20's ability to coordinate responses is severely constrained.
The United States, as the current G20 chair, has excluded South Africa from some of its affairs, a move that could further weaken the G20's collective ability to act during crises. The lack of a strong global coordination mechanism makes the already fragile prospects for economic recovery even more uncertain.
The impact of the Middle East wars has once again reminded the world that all countries must address this systemic crisis with a high degree of responsibility and a forward-looking perspective. The outcomes of the IMF and World Bank Spring Meetings are not only crucial for the implementation of short-term aid funds, but will also determine whether the global economy can find a new balance amidst the turmoil. Only by building consensus and implementing precise policies can we minimize the long-term damage of war to global livelihoods and development. Otherwise, the chain reaction of slowing economic growth, high inflation, and exacerbated food crises could evolve into a profound economic storm sweeping across all of humanity.
In the early stages of the war, geopolitical risks drove safe-haven demand, causing gold prices to rise rapidly and reach a temporary high (such as briefly exceeding $5,400 per ounce). However, as the conflict continued, factors such as a strong dollar, inflation concerns due to rising oil prices, and investors shifting to dollar cash weakened gold's traditional safe-haven appeal, leading to a price correction and consolidation at high levels (recently fluctuating around $4,500-$5,000).
The signals from the IMF and World Bank to lower growth forecasts and raise inflation projections have further increased economic uncertainty, which is theoretically beneficial for the long-term performance of gold. However, in the short term, if there are signs of easing tensions in the war (such as news of a ceasefire), gold prices may face downward pressure in the medium to long term.
Overall, gold still possesses safe-haven attributes in the current environment, but its actual gains are constrained by the strength of the US dollar and inflation expectations. Investors need to pay attention to the progress of the war and the Federal Reserve's policy dynamics.
At 14:12 Beijing time, spot gold was trading at $4725.12 per ounce.
Spring meetings are clouded by tensions; Middle East wars reshape the global economic agenda.
Senior officials from the IMF and World Bank made it clear last week that they would significantly lower their global economic growth forecasts while raising their inflation forecasts due to the ongoing Middle East conflict. This shift came as abruptly as the outbreak of the war in Iran on February 28th. Prior to this, given the strong resilience of the global economy, both institutions had planned to raise their growth forecasts, believing the recovery was stabilizing. However, the sharp rise in energy prices and supply chain disruptions caused by the war completely altered this optimistic outlook. The surge in energy costs directly increased production and transportation expenses, while the supply chain disruptions further slowed global trade flows, forcing the previously anticipated moderate recovery trajectory into a downward spiral. Experts unanimously warn that this shock will hit emerging markets and developing countries the hardest, as these countries are often highly dependent on energy imports and have relatively weak fiscal buffers.
Economic growth forecasts have been significantly revised downwards, exacerbating inflationary pressures.
The World Bank's latest forecast shows that emerging market and developing economies are expected to grow by only 3.65% in 2026, a significant downward revision from the 4% forecast last October. If the war lasts longer than expected, this figure could even fall further to 2.6%, meaning that the engine of global economic growth will face a serious risk of stalling.
At the same time, the inflation situation is equally worrying. The World Bank predicts that the inflation rate in these economies will reach 4.9% in 2026, far higher than the previous forecast of 3%; in the worst-case scenario, this figure could soar to 6.7%.
The rapid rise in inflation not only erodes people's real purchasing power but also exacerbates business operating costs, suppressing investment and consumer demand, creating a vicious cycle. The IMF has also issued a similar warning, emphasizing that the continued disruption of fertilizer transportation by war will directly lead to the breakdown of food production chains, further pushing up global food prices.
Emerging markets are facing multiple crises, making food security an urgent issue.
With public debt levels already at record highs, emerging markets and developing countries are facing a triple challenge: increasing debt, deteriorating food security, and slowing economic growth.
The IMF specifically pointed out that if the war continues to disrupt the transport of key agricultural inputs such as fertilizers, an additional 45 million people worldwide will face severe food shortages. Behind this figure lies the harsh reality that countless families may be plunged into hunger and poverty. Faced with extremely tight fiscal budgets, the IMF and the World Bank are going all out to address this latest crisis, providing emergency support to the most vulnerable countries.
The IMF estimates that $20 billion to $50 billion in emergency aid will be needed in the short term to help low-income countries and energy-importing nations weather the crisis.
The World Bank stated that it could raise approximately $25 billion in the short term using existing crisis response tools, and could expand the aid to up to $70 billion within six months if necessary.
However, economists strongly urge governments to take targeted temporary measures to alleviate price pressures, as any overly broad subsidies or interventions could further fuel inflation and create new economic risks.
Global leadership faces severe challenges, and coordination mechanisms encounter unprecedented constraints.
In an interview, World Bank President Angela Pennant emphasized: "Leadership is crucial, and we have successfully weathered many crises in the past."
He highly praised the efforts made by various countries in fiscal and monetary policy regulation, but also admitted that this crisis is a comprehensive shock to the entire global economic system, unlike any previous one.
The current international landscape has undergone profound changes: relations between the United States and major Asian powers remain tense, and the G20's ability to coordinate responses is severely constrained.
The United States, as the current G20 chair, has excluded South Africa from some of its affairs, a move that could further weaken the G20's collective ability to act during crises. The lack of a strong global coordination mechanism makes the already fragile prospects for economic recovery even more uncertain.
The impact of the Middle East wars has once again reminded the world that all countries must address this systemic crisis with a high degree of responsibility and a forward-looking perspective. The outcomes of the IMF and World Bank Spring Meetings are not only crucial for the implementation of short-term aid funds, but will also determine whether the global economy can find a new balance amidst the turmoil. Only by building consensus and implementing precise policies can we minimize the long-term damage of war to global livelihoods and development. Otherwise, the chain reaction of slowing economic growth, high inflation, and exacerbated food crises could evolve into a profound economic storm sweeping across all of humanity.
Impact on gold prices: Overall, the price action is characterized by a short-term upward push, increased volatility, but limited gains.
In the early stages of the war, geopolitical risks drove safe-haven demand, causing gold prices to rise rapidly and reach a temporary high (such as briefly exceeding $5,400 per ounce). However, as the conflict continued, factors such as a strong dollar, inflation concerns due to rising oil prices, and investors shifting to dollar cash weakened gold's traditional safe-haven appeal, leading to a price correction and consolidation at high levels (recently fluctuating around $4,500-$5,000).
The signals from the IMF and World Bank to lower growth forecasts and raise inflation projections have further increased economic uncertainty, which is theoretically beneficial for the long-term performance of gold. However, in the short term, if there are signs of easing tensions in the war (such as news of a ceasefire), gold prices may face downward pressure in the medium to long term.
Overall, gold still possesses safe-haven attributes in the current environment, but its actual gains are constrained by the strength of the US dollar and inflation expectations. Investors need to pay attention to the progress of the war and the Federal Reserve's policy dynamics.
At 14:12 Beijing time, spot gold was trading at $4725.12 per ounce.
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