IMF still on "high alert" over Iran war economic fallout despite peace deal

Investing.com -- The International Monetary Fund said Monday it remains on high alert over the economic fallout from the Middle East war. The warning comes despite a US-Iran agreement to reopen the Strait of Hormuz.

IMF Managing Director Kristalina Georgieva wrote in a blog post that energy supplies will take time to recover. The strait reopening follows more than three months of closure after the conflict began with US-Israeli attacks.

"That the global economy is so far weathering the shock is cause for reassurance — but not complacency," Georgieva wrote. She noted that commodity prices, inflation and expectations for it, and financial conditions have all been impacted, "but not yet in ways that signal a global slowdown."

Full details of the interim peace agreement between the US and Iran are not yet clear.

Georgieva said technological advancements helped cushion the impact of energy shortfalls over the past few months. She pointed to investments in artificial intelligence and data centers as key factors.

"The US is benefiting from this global technology cycle, as are economies in Asia that have seen stronger technology exports," she wrote. "Most countries, however, are yet to feel the productivity and growth impact of technology, leading to concerns about further economic divergence."

The IMF is providing financial assistance to countries affected by the energy shock. Bangladesh requested a new program, while Ethiopia asked to bring forward financing to this year.

"For now, most member countries are asking for clear, candid policy guidance rather than financial support," Georgieva said.

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