IMF, IEA, World Bank join hands to manage West Asia crisis impact

IMF, IEA and World Bank form coordination group to assess and manage energy and economic fallout of West Asia crisis, focusing on supply disruptions and global stability

The heads of the International Energy Agency (IEA), International Monetary Fund (IMF), and World Bank Group have agreed to form a coordination group to maximise their response to the energy and economic impacts of the war in West Asia.

 

The war has caused major disruptions to lives and livelihoods in the region and triggered one of the largest supply shortages in global energy market history, IMF said in a statement. The impact is substantial, global, and highly asymmetric, disproportionately affecting energy importers, particularly low-income countries, it added. 

 

The impact is already transmitted through higher oil, gas and fertiliser prices, and it is triggering concerns about food prices as well. Global supply chains — including of helium, phosphate, aluminum, and other commodities — are affected, as is tourism due to flight disruptions at key Gulf hubs.

 

"The resulting market volatility, weakening of currencies in emerging economies, and concerns about inflation expectations raise the prospect of tighter monetary stances and weaker growth. At these times of high uncertainty, it is paramount that our institutions join forces to monitor developments, align analysis, and coordinate support to policymakers to navigate this crisis," the IMF said.

 

To ensure a coordinated response, the group will assess the severity of impacts across countries and regions through coordinated data sharing on energy markets and prices, trade flows, fiscal and balance of payments pressures, inflation trends, export restrictions of key commodities, and supply chain disruptions.

 

It will also coordinate a response mechanism, including targeted policy advice, assessment of potential financing needs and related provision of financial support, including through concessional financing, and use of risk mitigation tools as appropriate. The group will also mobilise relevant stakeholders, including other multilateral, regional, and bilateral partners, to deliver coordinated and efficient support to countries in need.

 

The three institutions said they will work together to safeguard global economic and financial stability, strengthen energy security, and support affected countries and people on their path to sustained recovery, growth, and job creation through reforms.