The head of the International Monetary Fund (IMF) has warned that the Iran war will leave a permanent scar on the global economy, even if a durable peace agreement is reached.

IMF Managing Director Kristalina Georgieva said the conflict has already created “scarring effects” that will weigh on global growth and result in a downgrade to economic forecasts for next year.

She said that even in the most optimistic scenario, the world economy would not return to its previous trajectory, adding that there would be “no neat and clean return to the status quo.”

Georgieva made the remarks in a speech ahead of the IMF’s upcoming spring meetings in Washington, noting that uncertainty over energy supplies and global trade routes remains high.

She highlighted risks linked to continued disruption in shipping through the Strait of Hormuz, a key route for global oil and gas transport, and said recovery in energy infrastructure could take time.

According to her, oil-importing and developing economies are expected to be among the hardest hit by the economic fallout.

Georgieva urged countries to avoid protectionist measures such as export restrictions, warning that such actions could further destabilise global conditions.

She also called on governments to use targeted support for vulnerable groups and warned against broad tax cuts or subsidies that could strain public finances.

Her comments come amid continued volatility in global markets and concerns over the economic impact of the ongoing conflict in the Middle East.