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By Micah McCartney
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China has raised the alarm about the economic fallout from the Iran conflict after the International Monetary Fund warned a prolonged war could push the global economy close to recession.
"The IMF report again proves that the war causes not only heavy casualties and losses but also a severe spillover effect, restricting global economic growth and improvement of people's well-being," Chinese Foreign Ministry spokesperson Guo Jiakun told reporters during Wednesday's regular press briefing.
"It is a war that should not have happened, nor should the international community—least developed countries in particular—bear the brunt," the official went on, and reiterated Beijing's call to prevent a resumption of the fighting and to restore shipping through the Strait of Hormuz as soon as possible.
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Newsweek reached out to the U.S. State Department by email with a request for comment.
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Oil and gas prices have risen sharply worldwide in the nearly seven weeks since U.S. and Israeli strikes on Iran began, exacerbated by the Islamic Republic's closure of the Strait of Hormuz and retaliatory strikes on oil refineries and other energy infrastructure in neighboring countries.
As a result, the IMF in its latest World Economic Outlook raised its global inflation forecast to 4.4 percent, up from 3.8 percent in January, and 4.1 percent in 2025.
Until the war, the world economy had shown resilience in the face of President Donald Trump's protectionist policies, which imposed sweeping import tariffs on the United States, the world's largest economy and once a relatively open market. The impact was less severe than expected in part because Trump's tariffs last year were lower than initially announced.
A tech boom, marked by massive investment in data centers and artificial intelligence, along with rising productivity, also helped support global growth.
"War in the Middle East has halted this momentum,'' IMF chief economist Pierre-Olivier Gourinchas wrote in a blog post accompanying the fund's latest World Economic Outlook.
The IMF's forecast assumes the conflict in the Persian Gulf is short-lived and that energy prices rise "a moderate 19 percent'' this year.
"Things could be much worse. Despite the recent news of a temporary ceasefire, some damage is already done, and the downside risks remain elevated,'' Gourinchas wrote.
In a "severe scenario'' in which the energy shock extends into next year and central banks are forced to raise interest rates to combat inflation, global growth could drop to 2 percent in 2026 and 2027. Under this scenario, "the global economy would come close to experiencing a recession, with growth around 2 percent this year and next and global headline inflation near 6 percent," the report said.
This article includes reporting by The Associated Press.
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