International Monetary Fund publishes Managing Director statement on Middle East war spillovers and policy priorities for low-income developing countries

The International Monetary Fund published the Managing Director’s written statement assessing the global economic spillovers from the war in the Middle East and warning that the effects are uneven, with the poorest and most vulnerable countries hit hardest. The statement focuses on Low-Income Developing Countries (LIDCs), calling for pragmatic and agile policy responses supported by credible frameworks. For LIDCs, the IMF identifies key transmission channels including supply disruptions, higher commodity prices, second-round effects on inflation and expectations, tighter global financial conditions, exchange rate pressures, and reduced remittances from Gulf Cooperation Council (GCC) members. It argues that near-term policies should remain anchored in credible frameworks while efforts to strengthen resilience and growth potential continue, with medium-term structural reforms and stronger institutions highlighted as important for attracting foreign direct investment and creating jobs; it also calls for robust international support, especially for the most vulnerable LIDCs and fragile and conflict-affected states, and notes the IMF’s readiness to deploy its tools, including balance of payments financing where needed.