The world faces the spillovers of a new war. In addition to the human toll, the economic effects of the war in the Middle East are global, and will once again hit the poorest and most vulnerable countries the hardest. This comes at a time when policy space has eroded and international cooperation is weaker. The appropriate policy response depends on how the shock propagates through the domestic economy, calling for pragmatism and agility, backed by credible policy frameworks. The IMF stands ready to deploy all its tools to assist the membership. We will support good policymaking—advising also that this new test must not derail essential medium-term priorities—and provide balance of payments financing where needed.
A Wed, study studied this question.