IEA, IMF, and the World Bank decide to establish a coordination team to address the economic impact of the Middle East situation

On April 1, local time, the International Monetary Fund (IMF) announced that the heads of the International Energy Agency (IEA), the International Monetary Fund, and the World Bank Group have agreed to establish a coordination group to maximize the role of each institution in addressing the energy and economic impacts of the situation in the Middle East.

The three international organizations simultaneously released a joint statement, saying that the group will, through coordinating multiple data assessments, gauge the severity of the impacts on countries and regions in the Middle East amid the Israel–U.S.–Iran conflict, and coordinate response mechanisms, including concessional financing.

The joint statement said that the Israel–U.S.–Iran conflict has caused major disruption to the lives and livelihoods of people in the Middle East region and triggered one of the largest supply shortages in global energy markets in history. The shock is far-reaching, affecting the world, and is characterized by a high degree of imbalance, hitting energy importing countries, especially low-income countries, particularly hard. Rising prices of oil, natural gas, and fertilizer have already been transmitted globally, raising concerns about food prices. Global supply chains, including those involving helium, phosphate rock, aluminum, and other commodities, have also been affected; disruptions to key hub flights in the Gulf region have likewise impacted the tourism industry. Market volatility triggered as a result, currency depreciation in emerging economies, and concerns about inflation expectations further increase the risks of tighter monetary policy and slower economic growth.

The three international organizations said that, in a time marked by a high level of uncertainty, the institutions must work together, jointly monitor developments, coordinate analytical work, and provide coordinated support to help policymakers respond to this crisis. The joint decision has therefore been made to establish a coordination group.

According to the joint statement, on the one hand, the coordination group will assess the severity of impacts on countries and regions by sharing data on energy market prices, trade flows, fiscal and balance-of-payments pressures, inflation trends, restrictions on key commodity exports, and supply chain disruptions. On the other hand, it will coordinate the establishment of response mechanisms; specific measures may include: targeted policy recommendations, assessing potential financing needs and providing corresponding funding support (including concessional financing), and, as appropriate, applying risk-mitigation tools. In addition, relevant stakeholders, including other multilateral, regional, and bilateral partners, can be mobilized to provide coordinated, consistent, and efficient support to countries in need.

The three international organizations said that the coordination group will also, as needed, cooperate with other international organizations and draw on their professional expertise.