IMF managing director on ongoing war with Iran
WASHINGTON (CBS, KYMA) - IMF Managing Director Kristalina Georgieva spoke with Face the Nation moderator Margaret Brennan about the economic shock from the war in the Middle East.
When asked how she calculates the economic shock, Georgieva said:
"We look at the size of the impact and the duration of impact. And what I can tell you is that this shock is large. Thirteen percent of oil, 20% of gas that would have flown in the world is now stuck for five weeks and counting. It is global. Everybody uses energy. Everybody feels the pinch of prices going up. And it is asymmetric. It affects different countries differently. If you are in the vicinity of the conflict, it's a big hit on you. If you are an oil importer, it is a big hit on you. If you have no reserves to protect yourself, you are in a very tough situation. We are running scenarios depending on the duration of the war. Now we have hopes for peace that would improve the conditions for everybody, but we are also looking at impact on infrastructure. A lot has been damaged, and it would take time to bring back to full operation."
Brennan then asked Georgieva if we'll see this impact stretching through 2026 even if there is a ceasefire that sticks, and Georgieva said:
"So the impact is baked in, because already the tankers that should have arrived in Asia have not arrived, right? So we already have that impact. But then on top of it, we have the infrastructure impact. Seventy-two energy facilities have been hit, one-third of them severe damage. You take the gas field in Qatar, it would take three to five years to reach its full capacity. That has significance. And then we have other infrastructure impacts, like refineries. If they don't receive oil on a regular schedule, they have to shut down. When they shut down, to restart, that is with delay. So yes, we are going to see some drag of this crisis over the year. But if we have peace, of course, conditions are likely to improve faster. Above all, because confidence is going to benefit from the knowledge that there is a resolution of the fighting. Before- something that- that is very, very important to recognize. The world economy has been incredibly resilient. We have been hit by one shock and another and another. We were actually projecting a small upgrade for growth in 2026 had it not been for this war. Now we are going to have a downgrade, and the size of this downgrade will depend on these two things, duration and speed with which everything can come back to the same level of production that we had before."
Georgieva also spoke about the affects of President Donald Trump's tariffs, with Brennan asking if global economists overestimated the negative impact of President Trump's tariffs.
"So the Fund, when the tariffs came, was among the very few institutions that were not projecting recession. We did project some slow down in growth. We did see some slow down in growth...We thought it would be somewhat disruptive. It was somewhat disruptive. But then what happened was an adjustment. Adjustment in the United States, with agreements that have reduced the pressure that tariffs would put here and on the rest of the world, and we saw the rest of the world saying, 'Okay, let's see how we can trade more with each other.' Massive increase in trade agreements, more attention to regional trade...The U.S. is saying we want to have an economy that is mostly based on investing at home, having manufacturing at home. That's a choice that the country is making. Other countries are looking into their economic future. Small, open economies, they have no choice. They have to find ways to trade with each other, because otherwise it will be very costly for their people. So the developments are relatively calming in a sense that we see trade like water. You put an obstacle, it goes around it."
To watch Brennan's full interview with Georgieva, click here.
