Head of IMF says Iran war will permanently scar global economy even if peace is reached

IMF chief Georgieva said the Iran war will leave a permanent economic scar even if a durable peace deal is reached, with the Fund now expecting a growth downgrade versus its earlier 2026 forecast of 3.1%. She said the conflict has created supply disruptions, confidence damage and uncertainty around shipping through the Strait of Hormuz, while oil prices rose on Thursday as markets priced ongoing energy risk. The IMF’s message is that even a best-case ceasefire scenario will not restore the pre-war status quo, and that net oil importers, poorer countries and small island economies will be hit hardest. Georgieva also warned against price controls and broad energy subsidies, arguing they could worsen inflation and weaken public finances. For precious metals, the macro read-through is broadly supportive: a prolonged Middle East risk premium, higher oil, and slower growth keep gold well supported as a hedge against geopolitical and inflation shocks. Near term, traders will watch whether ceasefire tensions re-escalate and how the IMF’s updated World Economic Outlook frames the growth/inflation trade-off into next week’s spring meetings.