International Monetary Fund (IMF) Managing Director Kristalina Georgieva warned on Monday that the global economy would face a "much worse outcome" if the Middle East war drags on into 2027 with oil prices hitting around 125 dollars per barrel.
"We are going to see inflation climbing up, and then inevitably, inflation expectations would start de-anchoring," she said at a conference hosted by the Milken Institute in Washington, D.C.
Georgieva noted that current conditions, including a prolonged conflict, oil prices hovering at or above 100 U.S. dollars per barrel, and mounting inflationary pressures, have already activated the IMF's "adverse scenario."
In April, the IMF issued three scenarios for global GDP growth in 2026 and 2027, namely the main "reference forecast," a middle "adverse scenario," and a much worse "severe scenario."
Under the adverse scenario, global growth would slow to 2.5 percent in 2026, while inflation would rise to 5.4 percent.
The reference scenario, which assumes a short-lived conflict, projects growth of 3.1 percent and inflation of 4.4 percent.
"This scenario, with every day that passes, is further and further behind in the rear-view mirror," Georgieva said.
For the severe scenario forecast, global growth would be just 2 percent, with inflation hitting 5.8 percent.
IMF chief warns of 'much worse outcome' for global economy as Mideast war drags on
The on-site search for survivors has largely concluded following a deadly explosion at a fireworks factory in central China's Hunan Province on Monday, which killed 26 people and injured 61 others, local authorities said at a news conference on Tuesday.
The blast occurred at around 16:40 on Monday at a workshop of Huasheng Fireworks Manufacturing and Display Co., Ltd. in Liuyang, a county-level city under Changsha, the provincial capital.
Officials paused to mourn the victims at the beginning of the news conference. Among the injured, 55 with minor wounds have received treatment and are in stable conditions.
"More than 1,500 personnel from the fire, emergency response, public security and health departments have been deployed to carry out rescue operations, on-site response and medical treatment in an orderly manner. On-site search and rescue has now basically completed, and identity verification of the victims is underway. The leaders of the company concerned have been taken into legal custody. Real-time monitoring of air and water shows that the relevant environmental indicators are normal," said Chen Bozhang, mayor of Changsha City and deputy secretary of the Communist Party of China (CPC) Changsha Municipal Committee.
The Hunan provincial fire and rescue authorities dispatched 482 personnel, 116 fire trucks, 15 sniffer dogs, 18 drones, six robots and one robot dog to the scene, successfully pulling out seven trapped individuals.
"Next, we will concentrate the best medical resources to conduct case-by-case assessments of the injured, closely monitor their conditions, and dynamically adjust treatment plans to provide meticulous care. A special task force has been set up for follow-up assistance, adopting a 'one special team for one victim (family)' approach to proactively contact the families of the deceased and injured, and establish a closed-loop mechanism for learning about and addressing their needs," Chen said.
The mayor also vowed a full, transparent investigation into the cause of the accident.
"We will fully cooperate in the accident investigation, strictly adhering to the principles of seeking truth from facts and confronting problems head-on. We will carry out a comprehensive, in-depth and penetrating investigation to fully reconstruct the entire process and chain of the accident," he said.
Since 19:00 on Monday, all fireworks production enterprises in Changsha have suspended operations for safety rectification. Citywide safety inspections are underway to close regulatory loopholes, reinforce corporate responsibility and improve overall safety standards.
Death toll rises to 26 in central China fireworks plant explosion
