IMF and World Bank meetings show limits in managing global shocks amid U.S.-Iran conflict

Washington: Global finance leaders, buffeted by constant news from the U.S.-Iran conflict, confronted this past week their limited ability to mitigate the economic damage caused by increasingly frequent geopolitical shocks. They also acknowledged that reliance on US leadership to resolve crises is no longer the certainty it once was. At the International Monetary Fund and World Bank Spring Meetings in Washington, participants swung between gloom over a deteriorating global outlook driven by energy price and supply shocks, and cautious optimism after indications that Iran might reopen the Strait of Hormuz, allowing oil, gas, fertiliser and other commodities to flow again. By Saturday, that optimism had already faded following new attacks on shipping. The IMF and World Bank pledged up to a combined $150 billion in new financing for developing countries hit hardest by soaring energy prices and highlighted their renewed engagement with Venezuela’s acting government after a seven‑year pause. They warned countries against hoarding oil and urged restraint on costly, untargeted fuel subsidies. Ultimately, however, there was little to do beyond monitoring statements from Tehran and the White House. “Some of the most important decisions on the global economy are not happening here,” said Josh Lipsky, international economics chair at the Atlantic Council, referring to the IMF and World Bank campus. “The single most important development in the global economy happened between the US and Iran. We hope it’s good news, and we’ll wait and see.” Despite buoyant global equity markets and a sharp drop in oil futures on Friday, Saudi Finance Minister Mohammed Al‑Jadaan captured the prevailing caution, saying he would not predict a better outlook until tankers were moving freely through the strait again, with affordable insurance and falling physical energy prices. “If the clear waters are open,” Al‑Jadaan told a news conference, “that’s what would trigger, for me, a change in the scenario.” After the IMF released a modest downgrade of its 2026 global growth forecast to 3.1% under its most optimistic scenario, it quickly acknowledged the estimate was already outdated. The fund said the global economy was drifting towards a more adverse scenario of just 2.5% growth, warning that a prolonged war could tip the world into recession.