IMF: Energy supply recovery will take time, still maintains "high vigilance" regarding the impact of a potential US-Iran war

IMF: Energy supply recovery will take time, still maintains "high vigilance" regarding the impact of a potential US-Iran war

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The International Monetary Fund (IMF) stated that despite the US and Iran announcing an agreement to reopen the Strait of Hormuz, the organization remains "highly vigilant" about the impact of the Middle East war on the global economy, and warned that a full restoration of energy supplies will take time.

IMF President Kristalina Georgieva pointed out on Monday, "The global economy has so far successfully withstood this shock, which is reassuring, but we must not become complacent."

She noted that commodity prices, inflation levels and expectations, as well as financial conditions have all been affected, "but there are still no signs suggesting a slowdown of the global economy."

The US and Iran announced that they have reached a temporary peace agreement to reopen the Strait of Hormuz, more than three months after the US and Israel launched attacks against Iran and the subsequent outbreak of conflict. The full details of the agreement remain unclear.

Technology investments provide a buffer, but dividends are unevenly distributed

Georgieva said that over the past few months, the impact of energy shortages on the global economy has been partly offset by technological advancements, with investments in fields such as artificial intelligence and data centers playing a major role.

"The US is benefiting from this global technology cycle, as are Asian economies with strong exports," she wrote. However, she also warned that most countries have yet to experience the productivity gains and growth effects brought by technology, which has increased concerns about further divergence in the global economy.

Most member countries need policy guidance

On the policy response front, the IMF said it is providing loan assistance to member countries damaged by the energy shock, and is increasing or rearranging existing programs as needed.

Georgieva mentioned that Bangladesh has applied for a new IMF project, while Ethiopia has requested that its financing plan be brought forward to take effect this year.

However, she stressed that for now, what most member countries seek is not financial support, but "clear and candid policy guidance."

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