IMF: War-torn Nations See GDP Declines of Up to 7%

The International Monetary Fund (IMF) warned in a new study that countries experiencing wars can see GDP declines of up to 7% over five years, with negative effects persisting for more than a decade, according to Reuters.

The report highlighted that conflicts worldwide have reached unprecedented levels since the end of World War II, with over 35 countries experiencing armed conflicts in 2024, the latest year for which data is available. Approximately 45% of the world’s population lives in conflict-affected countries.

The IMF noted that economic losses from wars often exceed those caused by financial crises or natural disasters, and neighboring countries or key trading partners are also impacted by these shocks.

Kristalina Georgieva indicated that the IMF is preparing to lower global growth forecasts and raise inflation expectations due to the war on Iran. Meanwhile, Aghai Panga emphasized that the war will slow growth and increase inflation regardless of how quickly it ends.

The report also pointed out that conflicts contribute to persistent currency depreciation, depletion of reserves, and higher inflation due to widening external imbalances.

Global military spending has risen significantly over the past five years, with further increases expected, particularly among NATO countries aiming to raise defense budgets to 5% of GDP by 2035.