The Iran war has reached a point where 12 countries "can no longer hold on," and India believes that the destruction is "as severe as the pandemic."

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The "bill" of war is spreading across the globe.

From April 15 to 16, at the IMF and World Bank Spring Meetings held in Washington, two news items emerged simultaneously, outlining the intensity of the impact of the Middle East conflict on the global economy.

According to Reuters, IMF Managing Director Kristalina Georgieva stated at a press conference that at least 12 countries have sought new loan programs from the IMF to cope with surging energy prices and supply chain disruptions caused by the Middle East war, including several sub-Saharan African countries. She estimates that the war could trigger $20–50 billion in new financing needs, covering both new loans and expansions to existing financing projects for 39 countries.

Meanwhile, Bloomberg reports that Indian officials have described this impact as "potentially as destructive as the COVID-19 pandemic six years ago," warning that even if the war ends quickly, normalization of energy supply might take years.

IMF: Supply Shock "Will Not Disappear Overnight"

IMF Managing Director Georgieva was direct and stern in her remarks.

Even if the war ends tomorrow, the effects of supply disruption will not vanish overnight... Why? Because oil tankers are slow-moving ships—it takes 40 days to sail from the Persian Gulf to Fiji. In the coming weeks, the impact of supply disruptions will only deepen.

The blockade of the Strait of Hormuz is the core issue. The strait is a critical passage for global oil, natural gas, naphtha, helium, and fertilizers, upon which Asian countries are highly dependent. Georgieva warned that even if the conflict ends quickly, physical fractures in the supply chain cannot be swiftly repaired.

IMF Strategy Director Christian Mummsen added that the 12 countries are only an initial count, "we are still gathering information, and this list will likely expand." He noted that delays or cancellations in fertilizer shipments are heavily impacting developing countries, with some estimates indicating an additional 45 million people may face food insecurity.

In terms of fiscal policy, the IMF clearly opposes broad energy subsidies by nations. IMF Fiscal Affairs Director Rodrigo Valdes said bluntly at the press conference: "If you try to offset a supply shock by boosting demand, you will only end up with higher inflation." The IMF recommends that countries instead provide targeted temporary cash transfers to the most vulnerable groups, rather than lowering fuel prices.

Global Growth Forecast: "Drifting" Toward Worse Scenarios

This week, the IMF lowered its forecast for global growth in 2026 to 3.1%, but this figure is based on the assumption that the conflict ends quickly and oil prices return to normal.

IMF Chief Economist Pierre-Olivier Gourinchas admitted that the global economy is currently "drifting" away from this baseline forecast, leaning toward a more adverse scenario—in which global growth in 2026 would fall to 2.5%, with the average oil price at $100 per barrel for the year.

The worst "severe scenario" is even more extreme: if the conflict intensifies, global growth could drop to 2%, approaching the threshold of a global recession.

On the monetary policy front, the IMF's stance is "stay vigilant, but don’t act rashly." Georgieva stated:

Our advice to central banks is: if you have sufficient credibility, signal that you are committed to maintaining price stability, but don’t rush to raise interest rates. Wait and see how the situation develops.

Mummsen pointed out that financing costs in emerging markets and developing countries are already high, and although the financial markets are generally orderly, some tightening has occurred.

India: Activating the "COVID Playbook"

For India, the impact of this war is particularly direct.

India is the third-largest oil consumer worldwide, and about 90% of its natural gas comes from the Middle East. According to Bloomberg, Indian officials privately stated that the damage from the war in Iran may be comparable to the COVID outbreak in 2020, and even if the conflict ends, normalization of supplies such as liquefied petroleum gas may take years—because repairing the damaged facilities in Gulf countries itself takes time.

The Indian Ministry of Finance has planned multiple scenarios, one of which assumes the average oil price for the year at $120 per barrel.

The Modi government has taken various countermeasures: cutting diesel and gasoline taxes to stabilize retail prices, launching rescue programs for exporters facing the Middle East market, and setting up a $6.2 billion economic stabilization fund. Currently under discussion is a plan to launch a credit guarantee scheme of 2–2.5 trillion rupees (about $26.8 billion) for small and medium enterprises, offering 100% guaranteed, collateral-free loans—similar to the program implemented in May 2020 during the pandemic.

Modi’s Chief Secretary Shaktikanta Das bluntly pointed out this historical echo last week. He said the recent Gulf conflict and the blockade of the Strait of Hormuz "evoke memories of demand destruction and severe supply-side disruption during the COVID pandemic."

Indian Economy: Multiple Pressures at Once

The shock of the war is being transmitted to the Indian economy through multiple channels simultaneously.

Alexandra Hermann, an economist at Oxford Economics, noted that the rupee exchange rate, household purchasing power, Gulf remittances, fiscal space, and private investment are all under pressure at the same time, with "remarkably widespread vulnerabilities."

In terms of data, the pressure is already evident:

Foreign capital has withdrawn nearly $19 billion from the Indian market this year, close to the full-year record for 2025, and the rupee has fallen below the historical low of 95;
In the first full month after the outbreak (March), both Indian exports and imports contracted year-on-year. Exports to the Middle East in a single month plunged nearly 58%, equivalent to $3.5 billion; imports fell by $8.7 billion, a drop of over 50%;
Goldman Sachs lowered its forecast for India's growth in 2026 to 5.9%; Oxford Economics predicts 6.2%, both below the Indian government's target range of 6.8% to 7.2%.

On the fiscal deficit front, Indian Finance Minister Nirmala Sitharaman set this year’s target at 4.3% of GDP, but Standard Chartered economist Anubhuti Sahay expects that after digesting the shock of high oil prices, the deficit will widen by 0.7 to 0.9 percentage points, surpassing 5% of GDP.

DBS economist Radhika Rao warned that if the Strait of Hormuz remains blocked and oil prices stay high, "gradually raising retail fuel prices may be the next step," which will lead to "some demand destruction," similar to what happened after the Russia-Ukraine conflict in 2022.

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