Kristalina Georgieva
IMF chief Kristalina Georgieva urged global financial authorities to prepare for shocks from the escalation over Iran, including rising energy prices and supply disruptions. The conflict in the Middle East threatens the global economy with high inflation and slowing economic growth, which requires governments to be particularly cautious in their economic policies.
Shocks, the IMF predicts, may persist even after the active phase of the conflict may have ended. The discussion of how central banks should respond to new inflation risks, which may necessitate postponing key rate cuts, boils down to preparing for “shocks”.
Financial authorities must remain flexible and have ready response plans in case of new supply shocks to avoid recession. The IMF emphasizes that the global economy has shown resilience in recent years, but “geopolitical fragmentation” remains a major factor of uncertainty.
Inflation forecast
According to the updated World Economic Outlook report presented at the Spring Meetings, the IMF forecasts a gradual slowdown in global inflation, but the process is complicated by geopolitical factors and trade policies.
At the global level, it is expected to fall to 3.6%-3.8% (depending on regional scenarios), down from 4.1% in 2025. In the US, a return to the 2% target is projected only by the first half of 2027. In the Eurozone, inflation is returning to target faster than in the US, despite the pressure of high energy prices.
Emerging markets will be worse off. According to IMF forecasts, there is still a risk of double-digit inflation there due to rising food prices, especially in Africa and Central Asia.
The IMF recommends the Moldovan central bank to follow an “adaptive strategy”, where any changes in the prime rate should strictly depend on the actual dynamics of inflation and economic growth. It also emphasizes the importance of maintaining flexibility in the leu exchange rate to mitigate the effects of regional instability.
