War in the Middle East is deepening global inequality, IMF says

The IMF means that war does not spread economic damage evenly. Countries with money, energy access, and strong technology sectors can compete for scarce supplies. Poorer countries often cannot. As a result, recent shocks may increase the gap between economic winners and losers, both across countries and inside them.

The article gives several connected causes. Wars interrupt oil and gas exports, while energy prices rise. Low-income countries that import oil face higher costs for transport, power, and essential goods. They may also lack competitive technology sectors, making it harder to benefit from disruption caused by artificial intelligence.

The IMF still forecasts global growth of 3.1 percent this year and 3.4 percent in 2027. But it says those figures hide a reallocation of growth across economies. Inflation is expected to reach 4.7 percent this year, placing additional pressure on households already struggling with energy bills.

The IMF estimates that artificial intelligence could affect 40 percent of jobs over time. Its wording includes three possibilities: AI may augment some work, downgrade the quality or status of other work, and eliminate some jobs altogether. This makes AI a major source of potential economic disruption, not simply a new workplace tool.

The article connects rapid technological disruption with growing global instability. Countries with strong, competitive technology sectors may be better placed to adapt and capture new gains. Countries without those sectors could struggle as work changes, especially when they are also dealing with war, expensive energy, or climate-related shocks.

The figure is an estimate for the long term, not a prediction that 40 percent of jobs will disappear. The IMF presents AI alongside conflict, high energy prices, and climate change as forces that could widen income gaps. Its effects may therefore be uneven across economies and workers.

Bahrain, Iraq, Kuwait, and Qatar have all experienced interruptions to oil and gas exports because of the war on Iran, according to the IMF. The fund expects these countries to suffer double-digit drops in total output this year. Export disruption therefore becomes a direct economic shock, not only a supply problem for global markets.

The key mechanism is lost production and export income. When countries cannot ship their oil or gas normally, energy sales fall and related economic activity can weaken. Government revenues, business activity, and national output may all come under pressure. The article contrasts these countries with Saudi Arabia, whose economy is more diversified.

Saudi Arabia was forecast to shrink 3.3 percent this year before growing 7.9 percent in 2027, although that forecast predates recent attacks. Houthi attacks could further threaten tourism plans and perceptions of safety, adding another risk to the outlook.

Poorer countries are more vulnerable because they have less financial strength and fewer alternative resources. When vital supplies become scarce, richer countries can often compete more effectively for them. Low-income countries may instead face higher import bills, shortages, and weaker household purchasing power.

The IMF specifically highlights countries dependent on oil imports and lacking competitive technology-related sectors. Higher energy costs raise the price of transport and production. At the same time, limited technology capacity can make it harder to gain from rapid changes such as artificial intelligence. These pressures can reinforce one another.

The result is a wider risk of income gaps across and within countries. The article also identifies wars, climate change, high energy prices, and technological disruption as drivers of instability. Even if global growth continues, its benefits may be reallocated toward economies better equipped to absorb shocks.

The Strait of Hormuz matters because the article says roughly 20 percent of the world’s oil is shut off when Iran closes it. A disruption therefore affects far more than nearby countries. It threatens a major flow of energy into global markets and raises concern about energy security.

When less oil reaches buyers, available supply becomes tighter. Businesses and households may then face higher energy costs. The article links this wider pressure to soaring diesel prices, higher fertilizer prices, and rising inflation. Energy security has become national security, according to World Bank President Ajay Banga.

Global growth held up better than feared when Iran closed the strait, but Banga said pressures were building again. The IMF warned that a prolonged Middle East conflict could add to inflation and slow growth. Its forecast still shows expansion, but resilience may be reaching its limits.

Oil, diesel, and fertilizer are important inputs across the economy. When their prices rise, moving goods becomes more expensive, and producing food and other goods costs more. Businesses face narrower margins or raise prices. Households then pay more for essentials, including energy and goods affected by transport costs.

Fertilizer prices can increase farming costs, while diesel prices affect transport and other activity. These pressures can arrive together, as the article says they are doing. Higher operating costs contribute to inflation. Families facing larger energy bills may cut other spending, reducing demand for businesses and slowing economic activity.

The IMF estimates inflation will rise to 4.7 percent this year and 4.1 percent next year. Its chief economist, Silvana Tenreyro, warned that a prolonged Middle East conflict could add pressure to inflation and slow growth. She said economic resilience was reaching its limits.

Supply and demand determine how scarcity is priced. If a vital resource becomes harder to obtain while demand remains strong, available supply is insufficient for everyone at previous prices. Buyers compete, and prices tend to rise. The resource then goes to those able or willing to pay more, unless governments or other institutions intervene.

The article’s energy examples show the mechanism. A war can interrupt oil and gas exports, reducing supply. Importing countries then face higher energy costs. Businesses may pay more for fuel and production, while households pay more for energy and goods. Richer countries can often compete more effectively for limited supplies than poorer countries.

That means the financial burden is uneven. Low-income, oil-importing countries may suffer greater inflation and weaker growth. The IMF warns that shocks can widen income gaps across and within countries. Scarcity therefore affects not only prices, but also who can maintain living standards and economic activity.