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Financial Times18 April 2026
Economic pain from Iran war will hit poor countries hardest, officials say
62
Usefulness score
Globally significant supply shock but framed around developing economies and IMF, with no direct UK angle — a less recognisable example for UK examiners.
Summary
At the IMF/World Bank spring meetings, officials warned that the Middle East conflict and earlier closure of the Strait of Hormuz have delivered a negative supply shock that will hurt developing, import‑reliant economies most. Higher energy, food and fertiliser prices, alongside a stronger US dollar, are set to raise inflation, weaken growth and worsen debt vulnerabilities, especially in sub‑Saharan Africa; several countries may need augmented IMF support.
Application
How to use this in an exam answer.
Use this as a contemporary example of cost‑push (imported) inflation from an adverse global supply shock, with transmission via higher oil and food prices and dollar strength. It illustrates why net energy importers face deteriorating current accounts, tighter fiscal space, and potential recourse to IMF programmes; contrast with advanced economies/energy exporters that are more resilient. It also supports discussion of equity effects (K‑shaped outcomes) and the political economy of subsidies on fuel and food.
Evaluation
How to critically assess it.
Impact may be smaller if hostilities de‑escalate—Brent fell 11% to $88—so the shock could be short‑lived. Effects are heterogeneous: energy exporters and economies with strong fundamentals or prior reforms may benefit or cushion the hit, while efficiency gains in advanced economies reduce oil‑shock sensitivity. Forecasts are uncertain and attribution is complex; multiple factors beyond the conflict (domestic policy, debt management, weather) also drive inflation, growth and financing needs.