IMF’s Dan Katz Warns Middle East Conflict Could Disrupt Global Economy

The duration and severity of the ongoing Middle East conflict will be key determinants of its impact on the global economy, particularly concerning energy markets and infrastructure, according to Dan Katz, First Deputy Managing Director of the International Monetary Fund (IMF). Prolonged uncertainty and sustained energy price shocks could prompt central banks to proceed cautiously, he cautioned.

Potential Economic Impacts

Speaking at the Milken Institute Future of Finance conference in Washington on Tuesday, March 3, 2026, Katz stated the conflict carries the potential to significantly impact inflation, growth, and other key economic indicators. However, he emphasized it was premature to draw definitive conclusions given the evolving situation. Prior to recent escalations, including U.S. And Israeli airstrikes on Iran and subsequent regional responses, the IMF had projected global GDP growth of 3.3% for 2026, fueled by ongoing investment in artificial intelligence and anticipated productivity gains.

Focus on Infrastructure and Key Sectors

Katz highlighted that the economic fallout will depend on further geopolitical developments and the extent of disruption to regional infrastructure and critical sectors. “Physical damage to production facilities and critical industries, particularly energy, is what everyone will be focused on,” he said. The IMF is actively monitoring trade disruptions, surging energy prices, and financial market volatility stemming from the conflict. Brent crude rose to $83 per barrel on Tuesday, representing a 15% increase from Friday, following Iran’s threats to target ships navigating the Strait of Hormuz.

Central Bank Response and Inflation

Katz suggested central banks are likely to “gaze through” temporary energy price spikes, given their primary focus on core inflation. However, they may be compelled to act if sustained shocks destabilize inflation expectations. He drew parallels to the post-COVID inflation surge of 2022, noting that lessons learned from the Russia-Ukraine crisis regarding energy price pass-through could inform current monetary policy decisions.

Dan Katz’s Background

Dan Katz assumed the position of First Deputy Managing Director of the IMF on October 6, 2025, after serving as Chief of Staff at the United States Department of the Treasury. He previously held roles in financial intelligence and international economic matters, and has experience in both the public and private sectors, including positions at Goldman Sachs and a global macro hedge fund. He was born in December 1987 and holds a bachelor’s degree from Yale University and a Juris Doctor from New York University School of Law.