IMF chief warns that Iran war will slow global economic growth

WASHINGTON (AP) — The Iran war is darkening the outlook for the world economy — whether or not a fragile ceasefire holds, the head of the International Monetary Fund warned Thursday.

Managing Director Kristalina Georgieva said the fund will downgrade its forecast for the world economy next week.

“Had it not been for this shock, we would have been upgrading global growth,” Georgieva said in remarks before next week's IMF-World Bank spring meetings. "But now, even our most hopeful scenario involves a growth downgrade.''

The world economy had proved resilient in the face of President Donald Trump's decision to impose sweeping taxes last year on imports from most the world's countries. In January, the 191-country IMF had upgraded the global growth outlook to 3.3% and was poised to do so again when its new forecasts came out next Tuesday.

But the war, which began Feb. 28, changed everything. The conflict has driven up the price of oil and natural gas; damaged oil refineries, tanker terminals and other energy infrastructure; disrupted shipments of fertilizer the world's farmers depend on; and damaged the confidence of businesses and consumers.

The United States and Iran announced Tuesday they'd reached a ceasefire — after Trump warned that otherwise "a whole civilization will die tonight.''

Still, Georgieva said Thursday that "growth will be slower — even if the new peace is durable.''

Sub-Saharan Africa and small island countries are most vulnerable to the energy shock, Georgieva said. Around the world, governments have only a limited ability to support their economies with spending increases and tax cuts because their debts are already so high.

She noted that many countries have taken steps to limit the damage from the energy shock such as urging or requiring people to work from home; encouraging more use of public transportation; and limiting travel by public officials.

Georgieva pleaded that policymakers “be careful not to make things worse'' with ”go-it-alone'' moves such as limiting exports and imposing price controls. "Don’t pour gasoline on the fire,'' she said.

International Monetary Fund (IMF) Managing Director Kristalina Georgieva arrives to speaks at a news conference ahead of the World Bank/IMF Spring Meetings at the IMF headquarters in Washington, Thursday, April 9, 2026. (AP Photo/Jose Luis Magana)

International Monetary Fund (IMF) Managing Director Kristalina Georgieva speaks at a news conference ahead of the World Bank/IMF Spring Meetings at the IMF headquarters in Washington, Thursday, April 9, 2026. (AP Photo/Jose Luis Magana)

International Monetary Fund (IMF) Managing Director Kristalina Georgieva speaks at a news conference ahead of the World Bank/IMF Spring Meetings at the IMF headquarters in Washington, Thursday, April 9, 2026. (AP Photo/Jose Luis Magana)

International Monetary Fund (IMF) Managing Director Kristalina Georgieva speaks at a news conference ahead of the World Bank/IMF Spring Meetings at the IMF headquarters in Washington, Thursday, April 9, 2026. (AP Photo/Jose Luis Magana)

FILE - Kristalina Georgieva, managing director of the International Monetary Fund (IMF), listens during a briefing in Beijing, China, Dec. 10, 2025. (AP Photo/Ng Han Guan, File)

DUBAI, United Arab Emirates (AP) — In a potential boost to Middle East ceasefire efforts, Israeli Prime Minister Benjamin Netanyahu said Thursday that he authorized direct negotiations with Lebanon “as soon as possible” aimed at disarming Iranian-backed Hezbollah militants and establishing relations between the neighbors.

The two countries have technically been at war since Israel was established in 1948, and Netanyahu later stressed that there was no ceasefire between them. In a video statement, the Israeli leader said Israel will keep striking Hezbollah until security is restored in northern Israel.

There was no immediate response from Lebanese authorities. But Israel-Lebanon negotiations were expected to begin next week at the State Department in Washington, according to a person familiar with the plans.

The prospect of talks appeared to bolster the tentative ceasefire in the Iran war that has staggered under the weight of Israel’s bombardment of Beirut, Tehran’s continued chokehold on the Strait of Hormuz and uncertainty over whether planned peace talks can find common ground.

Netanyahu's announcement came amid disagreement over whether the ceasefire deal included a pause in fighting between Israel and Hezbollah, and a day after Israel pounded Beirut with airstrikes that resulted in the deadliest day in Lebanon since the war began on Feb. 28.

Israel has fought multiple wars and launched several major invasions over the years, most recently sending in large numbers of troops last month in response to Hezbollah fire on Israel’s northern border communities.

The launch of direct peace talks is a significant achievement, though reaching a deal will be difficult after decades of hostilities, Hezbollah’s continued presence and longstanding disagreements over the exact route of their shared border.

The talks in Washington are expected to be handled on the American side by the U.S. ambassador to Lebanon, Michel Issa, and on the Israeli side by the Israeli ambassador to the U.S., Yechiel Leiter, according to the person, who spoke on condition of anonymity due to the delicacy of the situation.

It was not immediately clear who would represent Lebanon.

Axios first reported the timing and location of the talks.

After declaring victory with the ceasefire announcement, both Iran and the U.S. appeared to apply pressure on each other. Semiofficial news agencies in Iran suggested forces have mined the Strait of Hormuz, a crucial waterway for oil that Tehran has closed. President Donald Trump warned that U.S. forces would hit Iran harder than before if it did not fulfill the agreement.

Questions also remained over what will happen to Iran’s stockpile of enriched uranium at the heart of tensions, how and when normal traffic will resume through the strait, and what happens to Iran’s ability to launch future missile attacks and support armed proxies in the region.

Iranian President Masoud Pezeshkian said in a message on Telegram that the decision to accept a ceasefire was made unanimously by senior government leaders and approved by the supreme leader. He said the ceasefire “is not a sign of weakness but a way to solidify Iran’s proud victories."

Despite the fragile and disputed nature of the ceasefire, it appeared to have halted weeks of missile and drone attacks by Iran on its Gulf Arab neighbors and Israel, with no new launches reported Thursday. There were no reports of strikes by the U.S. or Israel targeting Iran.

Iran’s parliament speaker, Mohammad Bagher Qalibaf, warned Thursday that continued Israeli attacks on the Iran-backed Hezbollah militant group in Lebanon would bring “explicit costs and STRONG responses” in a social media post.

Qalibaf has been discussed as a possible negotiator who could meet U.S. Vice President JD Vance this weekend in Islamabad. The White House has said Vance would lead the delegation for talks starting Saturday.

Iran had said Israel's ongoing attacks on Hezbollah were violating the ceasefire agreement. Netanyahu and Trump have said it was not.

Hours before opening the way for talks with Lebanon, Netanyahu said Israel would continue striking Hezbollah “with force, precision and determination.”

Lebanon’s health ministry said more than 300 people were killed and more than 1,000 wounded Wednesday in Israeli strikes in central Beirut and other areas of Lebanon that Israel said targeted Hezbollah, which joined the war in support of Tehran.

Israel said Thursday it killed an aide to Hezbollah leader Naim Kassem, Ali Yusuf Harshi. Hezbollah did not immediately respond to a request for comment.

A New York-based think tank warned that the ceasefire “ hovers on the verge of collapse ” following Israel's strikes Wednesday.

Lebanon’s state-run National News Agency reported that an Israeli strike overnight killed at least seven people in southern Lebanon. The Israeli military did not immediately acknowledge the strike.

Semiofficial news agencies in Iran published a chart Thursday suggesting the country’s paramilitary Revolutionary Guard put sea mines into the Strait of Hormuz during the war — a message that may be intended to pressure the United States.

The chart, released by the ISNA news agency and Tasnim, showed a large circle marked “danger zone” in Farsi over the route ships take through the strait, through which 20% of all traded oil and natural gas once passed.

Only a trickle of ships have transited since the war began after several were attacked, and Iran threatened to hit any that it deemed connected to the U.S. or Israel. Ships appeared to continue to avoid the strait even after the ceasefire.

The chart suggested that ships travel through waters closer to Iran’s mainland near Larak Island, a route that some ships were observed taking during the war. It was dated from Feb. 28 until April 9, and it was unclear if the Guard had cleared any mines since then.

Iran’s deputy foreign minister, Saeed Khatibzadeh, told the BBC that his country will allow ships to pass through the strait in accordance with “international norms and international law” once the United States ends its “aggression” in the Middle East and Israel stops attacking Lebanon.

The head of the United Arab Emirates’ major oil company, Sultan al-Jaber, said some 230 ships loaded with oil were waiting to get through the strait and must be allowed "to navigate this corridor without condition.”

The strait’s de facto closure has caused oil prices to skyrocket — affecting the cost of gasoline, food and other basics far beyond the Middle East. Oil prices fell Wednesday on news of the ceasefire but climbed again as uncertainty over the deal grew.

The spot price of Brent crude, the international standard, was around $98 Thursday, up about 35% since the war began.

The fate of Iran’s missile and nuclear programs — which the U.S. and Israel sought to eliminate in going to war — also remained unclear. The U.S. insists Iran must never be able to build nuclear weapons and wants to remove Tehran’s stockpile of highly enriched uranium, which could be used to build them. Iran insists its program is peaceful.

Trump said Wednesday that the U.S. would work with Iran to remove the uranium, buried in last year's U.S. and Israeli strikes, though Iran did not confirm that. In one version of the ceasefire deal that Iran published, it said it would be allowed to continue enrichment.

The chief of Iran’s nuclear agency, Mohammad Eslami, said Thursday that protecting Tehran’s right to enrich uranium is “necessary” for any ceasefire talks.

Trump warned that U.S. warships and troops will remain around Iran “until such time as the REAL AGREEMENT reached is fully complied with.”

Corder reported from The Hague, Netherlands. Becatoros reported from Athens, Greece. Associated Press writers Chan Ho-him in Hong Kong, Zeke Miller and Matthew Lee in Washington and Kareem Chehayeb and Hussein Malla in Beirut contributed to this report.

Men inspect the damage to their home destroyed in an Israeli airstrike a day earlier in Beirut, Lebanon, Thursday, April 9, 2026. (AP Photo/Emilio Morenatti)

Lebanese civil defense workers inspect the rubble at the site of a building destroyed in an Israeli airstrike a day earlier in Beirut, Lebanon, Thursday, April 9, 2026. (AP Photo/Hussein Malla)

Lebanese civil defense workers search for victims in the rubble of a building destroyed in an Israeli airstrike a day earlier in central Beirut, Lebanon, Thursday, April 9, 2026. (AP Photo/Hassan Ammar)

A man gathers his belongings from his home, which has been destroyed in an Israeli airstrike a day earlier in Beirut, Lebanon, Thursday, April 9, 2026. (AP Photo/Emilio Morenatti)

A government supporter weeps during a mourning ceremony marking the 40th day since the death of Iranian Supreme Leader Ayatollah Ali Khamenei, who was killed in the U.S. and Israel strikes in Tehran, Iran, Thursday, April 9, 2026. (AP Photo/Vahid Salemi)

Government supporters walk past a billboard depicting Iran's Supreme Leader Mojtaba Khamenei as they gather to mark the 40th day since the killing of his father, slain Supreme Leader Ayatollah Ali Khamenei, in Tehran, Iran, Thursday, April 9, 2026. (AP Photo/Vahid Salemi)

A sign for a roadside hotel is seen on Road 2 near Golhahr, Iran, Thursday, April 9, 2026. (AP Photo/Francisco Seco)

People inspect the rubble of a building destroyed in an Israeli airstrike a day earlier in Beirut, Lebanon, Thursday, April 9, 2026. (AP Photo/Hussein Malla)

Government supporters gather to mark the 40th day since the death of Supreme Leader Ayatollah Ali Khamenei in Tehran, Iran, Thursday, April 9, 2026. (AP Photo/Vahid Salemi)

A rescue worker extinguishes burning cars at the site of an Israeli airstrike in central Beirut, Lebanon, Wednesday, April 8, 2026. (AP Photo/Hussein Malla)

Smoke rises following several Israeli airstrikes in Beirut, Lebanon, Wednesday, April 8, 2026. (AP Photo/Hassan Ammar)

Ali, 4, holds a toy horse next to the tent his family uses as a shelter after fleeing Israeli bombardment in southern Lebanon, in Beirut, Lebanon, Wednesday, April 8, 2026. (AP Photo/Emilio Morenatti)

Government supporters gather ahead of the funeral procession for Maj. Gen. Majid Khademi, head of intelligence for Iran's paramilitary Revolutionary Guard, in Tehran, Iran, Wednesday, April 8, 2026. (AP Photo/Francisco Seco)

FILE - Two police officers walk in front of an anti-U.S. billboard depicting American aircraft being caught by Iranian armed forces in a fishing net beneath the words in Farsi, "The Strait of Hormuz will remain closed, The entire Persian Gulf is our hunting ground," in Tehran, Iran, Sunday, April 5, 2026. (AP Photo/Vahid Salemi, File)