International Monetary Fund Research on War Costs

The International Monetary Fund released research on the economic costs of wars and military spending, revealing that conflicts cause an average output decline of 7% over five years and economic scars lasting over a decade. The report, which covers wartime economies since 1946, highlights that over 35 countries experienced conflict in 2024, affecting 45% of the world's population. The International Monetary Fund is set to cut its global growth forecast and raise inflation predictions due to the Iran war, a sentiment echoed by World Bank Group President Ajay Banga. The research also notes a global surge in military spending, with about half of the world's countries increasing their budgets, and NATO countries aiming for 5% of GDP by 2035. These buildups are often financed by higher deficits, leading to increased public debt and inflation, and sometimes by reprioritizing social spending, as discussed by International Monetary Fund economists Andresa Lagerborg and Hippolyte Balima.