As top global financial leaders gathered this week in Bangkok for annual international economic meetings, the International Monetary Fund issued a stark warning on Tuesday: ongoing conflicts across the Middle East are rapidly widening the economic gap between wealthy and poor nations worldwide, deepening systemic global inequality.
In its newly released World Economic Outlook report, the IMF outlined that multiple concurrent regional tensions — including escalated conflict around the Gulf, open hostilities with Iran, and Israel’s military campaign in Gaza — are key drivers behind the growing divide between economic winners and vulnerable, disadvantaged economies. These conflicts are not the only sources of rising global instability, the organization noted: climate change-related shocks, persistently high global energy prices, and rapid disruptive technological change, most notably the exponential rise of artificial intelligence, are also amplifying systemic economic risk.
IMF Managing Director Kristalina Georgieva cautioned that current projections suggest over the long term, AI could reshape the global labor market dramatically, with up to 40 percent of all existing jobs facing modification, downgraded responsibilities, or full elimination. Developing and low-income nations, Georgieva emphasized, will bear the brunt of all these overlapping crises, as they lack the financial and institutional resources to compete with wealthy countries for limited global supplies of critical goods, from energy to food to advanced technology.
World Bank President Ajay Banga echoed these concerns during his remarks in Bangkok, noting a major global shift in how nations frame their economic priorities: “What’s happening is that every country has now suddenly figured out that energy security is national security.”
The IMF’s data confirms the immediate economic damage of Middle East conflicts: Bahrain, Iraq, Kuwait and Qatar have all seen major disruptions to their oil and gas exports amid tensions with Iran, with the IMF forecasting double-digit contractions in total annual economic output for these states this year. For Saudi Arabia, whose more diversified economy was projected to shrink by 3.3 percent this year before returning to 7.9 percent growth in 2027, that forecast was finalized before recent attacks targeting Riyadh’s international airport and other key infrastructure. Ongoing Houthi attacks across the region have upended this projection, putting the kingdom’s fast-growing tourism sector — a core pillar of its long-term economic diversification plan — at severe risk. Multiple expatriate residents of Riyadh have told Middle East Eye that a growing number of foreign workers no longer feel safe living in the kingdom, threatening a key source of labor for the expanding tourism and service sectors.
Beyond Middle East conflicts, the IMF also cited Russia’s ongoing war in Ukraine and the large-scale trade tariffs first implemented by former U.S. President Donald Trump as additional core contributors to global economic fragmentation and instability. Banga told Reuters that while global growth performed better than initially expected after Iran closed the Strait of Hormuz — a strategic chokepoint through which roughly 20 percent of the world’s global oil supplies pass — new economic pressures are already building rapidly.
Multiple overlapping crises are hitting vulnerable economies simultaneously: skyrocketing diesel prices, surging costs for agricultural fertilizer that drive up global food prices, and the looming threat of a powerful “super” El Niño event that climate experts project could cause up to 450,000 heat-related deaths globally.
IMF Chief Economist Silvana Tenreyro warned that a prolonged period of conflict in the Middle East would only add more upward pressure on already high global inflation and slow already muted growth. “The economy has been resilient, but that resilience is reaching its limits,” Tenreyro said.
The IMF’s baseline forecast projects global growth will hit 3.1 percent this year and edge up slightly to 3.4 percent in 2027, but the organization stressed that this headline figure “masks a reallocation of growth across economies”. Low-income countries that rely on oil imports and lack competitive advanced technology sectors face a sharply elevated risk that recent overlapping shocks will widen income gaps between and within national economies.
Global inflation is projected to rise to 4.7 percent this year before easing slightly to 4.1 percent in 2026, the IMF reported, with growing numbers of households across the world already struggling to cover skyrocketing energy and basic living costs.
