BANGKOK — Senior finance officials from around the world will gather in Thailand this week under the weight of a widening war in the Middle East, the biggest energy supply shock ever, and rising interest rates — a combination that poses daunting risks to an already-sluggish global economy.

The US-Israeli-led war with Iran, now in its eighth month, along with the inflation and hardship it has caused, is set to dominate both the formal agenda and the corridor conversations at the annual meetings of the International Monetary Fund (IMF) and World Bank, which are being held outside Washington for the first time in three years. The sessions convene finance ministers, central bank governors and development officials, and traditionally close with communiqués from the IMF's International Monetary and Financial Committee and the World Bank's Development Committee — statements that will show whether members can find common ground on energy, debt and relief for strained borrowers.

One notable absence will be US Treasury Secretary Scott Bessent, who dispatched two senior officials in his place while he attended to some "domestic engagements," a US official said. His decision to skip the high-profile gathering — along with a meeting of the Group of 20 (G20) major economies, which the United States leads this year — may frustrate counterparts amid rising tensions over the Iran war, Ukraine's battle against Russia's invasion, and Washington's move to impose sanctions on the International Criminal Court.

World Bank President Ajay Banga told Reuters that global growth had held up better than feared when Iran closed the Strait of Hormuz — the narrow passage linking Persian Gulf producers to global shipping lanes — shutting off roughly 20% of the world's oil. Pressures, however, are building again: soaring diesel prices, rising fertilizer costs, and a looming "super" El Niño — a climate pattern driven by unusually warm Pacific waters that can disrupt weather worldwide — that experts say could lead to 450,000 heat-related deaths are all hitting at once.

Under pressure from US President Donald J. Trump, who is keen to see lower gasoline prices before November elections that could cost his Republican Party control of Congress, Group of Seven countries have agreed to release 100 million barrels of diesel and crude oil from emergency reserves.

On Friday, Mr. Trump announced a deal with Russia that would supply even more diesel to global markets and temporarily waive US sanctions designed to deprive Moscow of revenue for its war on Ukraine. The move drew swift criticism from Ukrainian President Volodymyr Zelensky.

More than 1 billion barrels of oil have been released since the war began on Feb. 28, drawn mainly from onshore commercial inventories. Industry executives say, however, that the amount of oil in storage accessible to the global market is running low, making the market more fragile and fueling pressure on prices.

Mr. Banga said the World Bank was not revising down its global forecasts at the moment but was keeping a close eye on developments.

"The real thing is not just El Niño by itself; it's the combination… What's happening to fertilizer prices? What's happening to energy costs? What's happening to debt? It's that put together that creates its own challenges," he said. "And I think that will call upon all of us to be far more careful on what we prepare for in the coming months."

Rising Debt

IMF Managing Director Kristalina Georgieva issued a similar warning in her traditional curtain-raiser speech previewing the meetings, telling the audience: "Winter is coming."

The IMF has signaled little change to its forecast of 3% global growth in 2026 and may edge its projection for next year slightly higher. The updated forecasts are traditionally published during the annual meetings and anchor the week's policy discussions. Still, some countries face downgrades, including Ukraine — now in its fifth year of war against Russia's invasion — and Gulf countries hit by Iranian strikes and sharply reduced energy exports.

IMF research released on Tuesday showed that sharp spikes in food and energy prices are an increasingly common source of crises, driving inflation expectations higher for longer, worsening poverty, and threatening economic stability.

A major headache for policymakers is the growing public debt burden, which is sapping growth and adding to inflationary pressures. According to the IMF, public debt stands at its highest level since World War II and will exceed 100% of gross domestic product (GDP) before 2030.

Advanced economies, led by the United States, carry the highest debt-to-GDP ratios. But emerging markets and low-income countries are particularly vulnerable, facing a perfect storm of challenges: capital outflows in search of higher US rates, El Niño, and a lack of investment in artificial intelligence, which has mitigated negative supply shocks in the US and other rich countries.

Emerging Market Concerns

Developing countries are especially exposed because their high public debt levels will have to be renegotiated at higher interest rates. On average, interest payments already exceed 10% of revenue in developing countries.

Early in the COVID crisis, G20 leaders announced a suspension of debt service payments for the poorest countries through the Debt Service Suspension Initiative, but there is little appetite for such action now, according to diplomats from G20 countries, who said high debt levels and political pressures posed bigger hurdles this time.

Many lower-income countries are also worried about new IMF recommendations for loan programs that call for fewer, but deeper, reforms as a condition for approving lending — a change many fear will lead to painful austerity measures.

"Countries are already cutting their expenditures because their debt payments are going high and because of the IMF conditionality," said Iolanda Fresnillo, who works on debt justice for Eurodad. "We fear that this review of conditionality policy is just going to make things worse."

Kenya, she said, had avoided a debt restructuring by cutting public expenditures and trying to raise taxes, but the changes sparked significant protests, especially among young people.

Ms. Fresnillo said the IMF risked losing credibility unless it acknowledged the severity of the crisis facing many developing countries.

"As long as they continue with the governance structure that they have, they are becoming less and less relevant," she said. Her criticism points to the fund's quota-based voting system, which ties members' voting weight to their financial contributions and leaves developing countries with a limited share of decision-making power.

Security and Finance

Flight routes to Bangkok often pass through the Middle East, posing immediate security challenges for the more than 10,000 travelers descending on Thailand's bustling capital city of 9 million residents following recent attacks on Saudi airports.

The last off-site annual meetings of the IMF and World Bank took place in Morocco — the first annual meetings held on African soil since 1973 — just days after militants led by Hamas killed 1,200 in Israel, an attack followed by Israel's bombardment of Gaza, which killed more than 74,000 people and devastated cities throughout the Palestinian areas.

Three years later, the linkage between national security and international finance is clear — although finance officials at the time had dismissed the Hamas attack as not being an economic issue, said Josh Lipsky, vice-president of international economics at the Atlantic Council.

"Obviously there have been massive global ramifications," he said. "What we're currently experiencing with Iran and the closure of the Strait of Hormuz has a direct connection with what happened three years ago."

Policymakers needed to become more agile in responding to geopolitical crises in an increasingly interconnected world, Mr. Lipsky added.

"They have to be proactive and they have to recognize that they don't live in the world they used to." — Reuters