The heads of the International Energy Agency (IEA), the International Monetary Fund (IMF), and the World Bank Group have said they are working on tailored policies and financial support to ease the effects of the Middle East war on global energy and economies.
The global bodies outlined their plans to reduce the economic impact of the Middle East conflict in a joint statement on Monday.
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The effort was part of the coordination group established in early April to address the response to the energy and economic impacts of the war in the Middle East.
The Middle East conflict between the US, Israel, and Iran began on 28 February and has led to the disruption of the global supply of crude through the Strait of Hormuz.
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According to the IEA, IMF, and World Bank, the economic shock from the war has led to higher oil, gas, and fertiliser prices and raised concerns about food security and job losses.
“As we noted earlier this month, the impact of the war is substantial, global, and highly asymmetric, disproportionately affecting energy importers, in particular low-income countries.
“The shock has led to higher oil, gas, and fertiliser prices, triggering concerns about food security and job losses as well. Some oil and gas producers in the Middle East have also seen a dramatic loss of export revenue,” the global bodies said.
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The institutions said the situation remains very uncertain, while shipping through the Strait of Hormuz has yet to return to normal. The group added that the war’s negative impact on the global economy may take time to reverse.
“Even after a resumption of regular shipping flows through the Strait, it will take time for global supplies of key commodities to move back towards their pre-conflict levels—and fuel and fertiliser prices may remain high for a prolonged period given the damage to infrastructure.
“Due to supply disruptions, shortages of key inputs are likely to have implications for energy, food, and other industries. The war has also forcibly displaced people, impacted jobs, and reduced travel and tourism, which may take time to reverse.”
The institutions added that they are combining efforts, including at the country level, to leverage their respective expertise and provide tailored policy advice to help countries address the economic downturn caused by the war.
They added that, in their latest assessments, the IEA’s monthly Oil Market Report and the IMF’s World Economic Outlook, to be released on Tuesday, would address the countries most affected and provide tailored policies to ease the economic shock.
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“We also discussed the situations of the countries most affected by the shock, as well as the responses by our institutions.
“Our teams are working closely, including at the country level, to leverage our respective expertise and help countries through tailored policy advice and, in the case of the IMF and World Bank, financial support where needed,” the statement read.
They further reaffirmed their commitment to coordinating responses and providing support to their member countries to deliver a resilient recovery for the affected countries.
“We will continue to monitor closely and assess the impact of the war on energy markets, the global economy and individual countries, and to coordinate our response and support to our member countries—working with, and drawing on, other international organisations’ expertise as needed to lay the foundations for a resilient recovery that delivers stability, growth and jobs.”
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