Takeaways for Corporate Leaders From the Latest IMF and World Bank Meetings
This spring’s IMF and World Bank meetings highlighted how the Iran war, rising geopolitical uncertainty, and shifting supply chains are shaping a more fragile economic outlook that leaders must plan for.
The Iran war dominated conversations at the gathering of policymakers in Washington, DC, for International Monetary Fund (IMF) and World Bank spring meetings. But three other interconnected themes also featured frequently during public- and private-sector leaders’ discussions: managing through uncertainty, the new world order taking shape, and prioritizing supply chain resilience.
Ripples from the war in Iran are increasingly being felt globally—through energy prices but also other goods that are dependent on shipping through the Strait of Hormuz. There was a consensus during the meetings that the degree of the economic shock (largely seen as lifting inflation and slowing economic growth) would depend on the duration of the war and the closure of the strait, as well as the severity of damage to regional energy infrastructure.
There was hope, but little confidence, that the conflict would be resolved quickly. With that in mind, presentations in Washington focused more on possible scenarios, often referred to as “adverse” and “severe.” The IMF’s latest forecasts suggested global gross domestic product would grow by 3.1 percent in 2026 if the Iran war proves short-lived, down from 3.4 percent in 2025. However, in two more severe scenarios, growth could slow to 2.5 or even 2 percent this year, while global inflation could increase to an annual rate of 5.4 or even 6 percent.
That was a takeaway for leaders—not just thinking about how to consider business strategy vis-à-vis the war, but also more generally. In a world with greater policy uncertainty and a quickly changing technology landscape, thinking ahead about different economic paths and how business strategy could need to change with different scenarios increases the odds a company (or government or central bank) can course correct quickly if needed and come through shocks more smoothly. Indeed, IMF Managing Director Kristalina Georgieva said that she, World Bank President Ajay Banga, and leaders from the International Energy Agency (IEA) are currently meeting twice a month to review their scenarios in light of the latest developments in the Gulf region.
While focusing on near-term developments, the World Bank’s Banga also highlighted the importance of ensuring teams stay on top of structural trends, including demographics and climate, that could shape organizational strategy.
Structural change and heightened uncertainty also featured prominently last week in conversations about the outlook for the global economic order. Even if there was broad consensus that the post–World War II Bretton Woods system no longer defined international economic relations, there was no consensus on exactly what would replace it.
What was striking, however, was how often meeting attendees shared examples of new initiatives underway to construct the new order. One senior policymaker from Asia mentioned how regional economic and foreign policy officials were meeting together for the first time to think about how to ensure economic security. Another policymaker from Spain discussed a cross-country task force looking at how to make her region more competitive in a multipolar global economy.
The prevailing sense was that policymakers shouldn’t just wait for the world to go back to the way it was or simply accept changes underway. Both private- and public-sector leaders want to shape how the world evolves. One frequently shared view was that the new order will be more transactional and focused on national rather than global goals, potentially contributing to relatively higher global inflation. Other trade-focused policymakers suggested that even if cross-border deals going forward were more transactional, they could be constructed to be open to others rather than exclusive.
The developing so-called new world order seems likely to include an emphasis on supply chain and energy resilience—not a surprising outcome given shocks over the last several years that have strained governments and companies around the world. The Iran war underscored a movement already underway to reshore manufacturing and shift supply chains towards allies and neighbors.
That shift suggests that the coming years could see more infrastructure investment and at least relatively greater inflation pressure. As an example, IEA Executive Director Fatih Birol last week highlighted the potential for a new oil pipeline from Iraq to Turkey to avoid the Strait of Hormuz.
While more infrastructure investment, supply chain shifts, and reshoring could create jobs, it will likely come with a trade-off in the form of relatively higher inflation. That, in turn, will be a source of upward pressure on interest rates, increasing the risk that companies and governments will face some degree of higher borrowing costs in the years ahead.
For corporate leaders, the latest IMF and World Bank meetings underscored the need to think ahead, both tactically around the conflict in the Gulf but also strategically, to navigate the risks and opportunities created by recent and ongoing conflicts alongside ongoing structural trends.