International Monetary Fund Managing Director Kristalina Georgieva has cautioned that a ceasefire between the US and Iran would not instantly stabilise the global economy, warning of a prolonged period of adjustment.

Speaking amid ongoing tensions, Georgieva said the economic impact of the conflict would take at least three to four months to ease, even if fighting were to stop immediately, according to Al Jazeera.

Earlier on Monday, the head of the International Monetary Fund warned that inflationary pressures are already building and the global economy could face a “much worse outcome” if the Middle East conflict drags on until 2027 and oil prices rise to around $125 per barrel.

She said the continuation of the war has effectively ruled out the IMF’s “reference scenario”, which had assumed a short-lived conflict and projected a modest slowdown in global growth to 3.1% alongside a slight rise in inflation to 4.4%. “This scenario, with every day that passes, is further and further behind in the rear-view mirror,” Georgieva said.

She added that ongoing hostilities, coupled with oil prices hovering at or above $100 per barrel and rising price pressures, indicate that the IMF’s “adverse scenario” is already unfolding.

She was speaking at an event hosted by the Milken Institute. “Now, if this continues into 2027 and we have oil prices of $125 more or less, then we have to expect a much worse outcome,” she said. “Then we are going to see inflation climbing up, and then inevitably, inflation expectations would start de-anchoring.”

Last month, the IMF outlined three possible trajectories for global GDP growth in 2026 and 2027 amid heightened uncertainty over the Middle East conflict: a baseline “reference forecast,” a middle “adverse scenario,” and a more severe downside case.

- Agencies