Once again, the spring meetings of the International Monetary Fund (IMF) and the World Bank Group—scheduled for April 13 through 18—will take place against the backdrop of a global economic and financial crisis. Triggered by the Iran war and the de facto closure of the Strait of Hormuz, global supply chains have been severely disrupted, threatening not only global energy markets but also the artificial intelligence (AI) investment boom, which has played a central role in driving global economic growth.
For the Bretton Woods institutions, the supply-side nature of the crisis poses a difficult challenge. Beyond preparing to provide financial support to member countries hit hardest by the Iran war, it remains unclear what policies they can recommend to key member states to manage the fallout. There is a risk that the IMF will produce rigorous analyses and conceptually sound policy recommendations—yet may still fall short of fully addressing the crisis at hand.
The Iran war could shake the tech investment boom
As the Iran war enters its second month, shipping through the Strait of Hormuz has remained severely constrained for longer than initially expected. This disruption has led to widespread supply shortages and surging prices, particularly for oil and gas. The knock-on effects of the crisis, however, could soon ripple far beyond energy markets. By driving up the costs of critical inputs such as electricity and semiconductors, it may also cast doubt on the AI investment boom.
Since many of the commodities and goods transiting the strait directly underpin the digital economy, the ongoing supply disruptions threaten the expected returns of many tech projects. For instance, the global oil and gas supply—roughly one-fifth of which passes through the Strait of Hormuz—not only fuels industrial production but also provides stable and low-cost energy to data centers. Similarly, helium shipments, currently experiencing a one-third shortfall, are essential for chip manufacturing, rocket production, and medical imaging. The same applies to 9 percent of the global aluminum supply. Moreover, production facilities in Gulf countries have been severely damaged by Iranian drone and missile attacks.
With the cost-benefit calculus supporting the projected $1.5 trillion in IT and AI investments now weakening, the equity valuations of high-tech corporations undertaking these projects have been marked down. Stock markets, led by the Nasdaq, have fallen—at one point by roughly 10 percent from recent highs—and are considered to be entering correction territory. More generally, financial conditions have tightened globally.
Any slowdown in the pace of AI investment will also dampen its contribution to GDP growth. In 2025, IT and AI investment expenditures—accounting for 4.5 percent of GDP—contributed as much as 39 percent of growth in the first three quarters, or up to 25 percent for the full year, according to estimates including imported IT equipment. This helped offset the impact of rising tariffs, sustaining global growth at 3.3 percent and US growth at 2.1 percent in 2025. Without the outsized contribution from IT and AI investment, underlying growth would have been substantially weaker.
As a result, the OECD recently revised its 2026 global growth estimate down to 2.9 percent. It is likely that the IMF will follow suit and downgrade its estimates in its upcoming World Economic Outlook.
What the IMF and the World Bank can—and cannot—do
Responding to the unfolding economic crisis—in particular sharply rising energy prices, which are hitting energy-importing, low-income countries hardest—the IMF and the World Bank have signaled readiness to provide financial support. However, beyond temporary financial assistance, it is not clear what they can do to help address the broader problem. The supply-side nature of the economic disruptions and their stagflationary impacts make it difficult for policymakers—both at the IMF and in national governments—to respond effectively, given their reliance on demand-management tools.
In a recent speech in Tokyo, IMF Managing Director Kristalina Georgieva offered the following guidance to countries on how to cope with a fluid global environment, including the conflict in the Middle East: first, invest in strong institutions and policy frameworks to underpin economies and private sector-led growth; second, use policy space when needed, provided buffers are rebuilt afterward; and third, remain agile.
This advice is sound. Indeed, countries—especially in the emerging market world—that have followed these policy prescriptions have demonstrated greater resilience in recent crises. However, for certain developed countries, the relevance of these recommendations to immediate challenges may be limited.
A crisis with few economic policy levers left to pull
In many Western countries, political and economic institutions and policy frameworks have weakened in recent years, contributing to slower potential growth. Fiscal deficits have been high for some time and are likely to remain elevated—around 5.7 percent of GDP—into the foreseeable future. Public debt, already at 123 percent of GDP this year, is projected to rise to 131 percent of GDP by 2030 under current policies. Major central banks still maintain bloated balance sheets, and their ability to ease monetary conditions is constrained by stubborn inflation—still above target in several countries—and by surging commodity prices.
Consequently, there appears to be little policy space in many developed countries for substantive fiscal or monetary measures to counter the stagflationary impacts of the crisis.
The pressing question is what these countries should do now to address the Iran war’s impact, rather than waiting to rebuild policy space. Moreover, since the supply chain crisis is driven by domestic politics and geopolitics—not economics—the Bretton Woods institutions have limited ability to address its root causes.
While the spring meetings may not offer immediate solutions for developed countries, they still play a critical role in supporting developing and low-income countries. They also serve as a forum for the G7, G20, and G24 to exchange views—likely the most that can realistically be expected amid today’s geopolitical and economic turmoil.
Hung Tran is a nonresident senior fellow at the Atlantic Council’s GeoEconomics Center, a senior fellow at the Policy Center for the New South, a former executive managing director at the Institute of International Finance, and a former deputy director at the International Monetary Fund.
At the intersection of economics, finance, and foreign policy, the GeoEconomics Center is a translation hub with the goal of helping shape a better global economic future.
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Image: The entrance to the International Monetary Fund (IMF) headquarters in Washington, DC. Source: Reuters.