IMF Warns of Broad Global Impact, Due to Conflict in the Middle East.<br />According to 'The Guardian,' the International Monetary <br />Fund recently highlighted the risks of escalating <br />conflict in the Middle East with two new reports. .<br />The reports, titled World Economic Outlook (WEO) and the Global Financial Stability Review (GFSR), comes amid heightened fears of a war between Iran and Israel.<br />The IMF reports that the escalating conflict comes at a time when financial markets have remained optimistic of a soft landing for the global economy.<br />The IMF reports that the escalating conflict comes at a time when financial markets have remained optimistic of a soft landing for the global economy.<br />That soft landing, which would include lowering inflation, receding interest rates and would avoid a potential recession, could be threatened by the outbreak of war.<br />That soft landing, which would include lowering inflation, receding interest rates and would avoid a potential recession, could be threatened by the outbreak of war.<br />'The Guardian' reports that previous Middle East conflicts have resulted in significantly higher oil prices. .<br />Pierre-Olivier Gourinchas, the IMF’s economic <br />counsellor, said the organization was evaluating the <br />potential for another commodity shock from the conflict.<br />The increased inflation that would <br />come from higher energy prices would <br />trigger a response from central banks that <br />would tighten interest rates in order to <br />secure inflation coming back to target, <br />and that would weigh down on activity, Pierre-Olivier Gourinchas, IMF economic counsellor, via 'The Guardian'.<br />The increased inflation that would <br />come from higher energy prices would <br />trigger a response from central banks that <br />would tighten interest rates in order to <br />secure inflation coming back to target, <br />and that would weigh down on activity, Pierre-Olivier Gourinchas, IMF economic counsellor, via 'The Guardian'.<br />It would do so in a context in which, <br />in some countries, activity and growth <br />is already fairly weak, so that might <br />also have a strong effect there, Pierre-Olivier Gourinchas, IMF economic counsellor, via 'The Guardian'.<br />According to Gourinchas, the impact of a 15% increase <br />in the price of oil, combined with higher shipping costs, <br />could result in a 0.7% increase in global inflation.<br />According to Gourinchas, the impact of a 15% increase <br />in the price of oil, combined with higher shipping costs, <br />could result in a 0.7% increase in global inflation.<br />Gourinchas also warned that such <br />an increase would also bring down <br />business confidence and global investment.
