The International Monetary Fund published an assessment of how the war in the Middle East is affecting the Western Hemisphere, arguing that the shock will play out very differently across countries but will push inflation higher across the region. The IMF links the transmission to shifts in global financial conditions and capital flows, swings in investor risk aversion, and volatile commodity prices, with the overall impact depending on the duration of the conflict and its associated disruptions. High energy prices are supporting external balances, growth and public finances for oil producers including Argentina, Brazil, Canada, Colombia, Ecuador, Guyana, Trinidad and Tobago, the United States, and Venezuela, although the IMF notes vulnerable households in these countries will still be hit by higher energy and food costs. By contrast, the tourism-dependent Caribbean is described as likely to be the hardest hit, reflecting high debt and large net energy imports averaging around 6 percent of gross domestic product. Central America is also exposed to higher energy prices, with limited fiscal space in some countries constraining mitigation, while prior moves to increase renewable generation provide some relief. Economies with sizable current account deficits and reliance on global financing are facing higher financing costs and reduced market access as risk appetite falls, even where they are energy exporters. On policy, the IMF argues that strong macroeconomic frameworks, anchored inflation expectations, credible fiscal plans and low debt provide the best protection, and that fiscal space should be used judiciously while countries with less space may need to tighten fiscal and monetary policy. It cautions that energy exporters with low international reserves, high debt or weak fundamentals should save most of any windfall, and urges fiscal authorities to avoid delaying food and fuel price pass-through while preserving recent reforms that replaced untargeted subsidies with targeted safety nets. The IMF states it will provide country-specific support through advice, cross-country insights and, where needed, its lending capacity.
International Monetary Fund 2026-04-17
International Monetary Fund says the Middle East war will raise inflation across the Western Hemisphere and deliver uneven growth effects
The International Monetary Fund assessed the war’s impact on the Western Hemisphere, concluding that effects will vary by country but generally push inflation higher via tighter global financial conditions, shifts in capital flows, and volatile commodity prices. Oil exporters benefit from stronger external and fiscal positions, while tourism-dependent Caribbean economies, Central America, and countries with large current account deficits and limited market access are more vulnerable to higher energy costs and risk aversion. The IMF underscores the importance of strong macroeconomic frameworks, prudent fiscal policy, saving energy windfalls, and maintaining targeted safety nets, and stands ready to provide country-specific advice and lending support.