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Sri Lanka repatriates 238 stranded Iranian sailors: Minister Published Apr 15, 2026, STCOLOMBO - Sri Lanka has repatriated 238 Iranian sailors stranded in the South Asian country after one of their warships was torpedoed by a US submarine, a minister told AFP on April 15.Deputy Defence Minister Aruna Jayasekara said 32 sailors rescued from the IRIS Dena – a frigate attacked on March 4 just off Sri Lanka – and another 206 from the IRIS Bushehr left on April 14.“A few sailors from the IRIS Bushehr are staying back to operate the vessel, but 206 joined those rescued from the IRIS Dena and returned home last night in a chartered aircraft,” Mr Jayasekara said.Official sources said 15 Iranian sailors will remain in Sri Lanka to operate the IRIS Bushehr, which is anchored off Trincomalee in the north-east of the island.The attack on the IRIS Dena brought the Middle East conflict into the Indian Ocean, killing 104 sailors in the early days of the US and Israeli war against Iran, according to Iranian authorities.The bodies of 84 victims were recovered and have been repatriated.In March, Iran’s ambassador to Sri Lanka Alireza Delkhosh said Tehran was in talks with Colombo to repatriate sailors from the IRIS Bushehr which was given safe harbour in Sri Lanka after the IRIS Dena was sunk.Sri Lankan President Anura Kumara Dissanayake said the island provided protection to the Bushehr crew on humanitarian grounds in line with the 1907 Hague Convention.It was not immediately clear on what basis the sailors from the second Iranian vessel were allowed to leave Sri Lankan custody.Sri Lanka has refused permission for US warplanes to use ground facilities in the country in order to maintain Colombo’s neutrality.A third Iranian ship – the IRIS Lavan, with 183 crew members – sought shelter in India’s Kochi port in early March.More than 100 non-essential crew of the IRIS Lavan have since left India. AFP
The global economy faces renewed tests as the war in the Middle East threatens to disrupt growth and disinflation.After withstanding higher trade barriers and elevated uncertainty last year, global activity now faces a major test from the outbreak of war in the Middle East. Assuming that the conflict remains limited in duration and scope, global growth is projected to slow to 3.1 percent in 2026 and 3.2 percent in 2027. Global headline inflation is projected to rise modestly in 2026 before resuming its decline in 2027. Slowdown in growth and increase in inflation are expected to be particularly pronounced in emerging market and developing economies. Downside risks dominate the outlook. A longer or broader conflict, worsening geopolitical fragmentation, a reassessment of expectations surrounding artificial‑intelligence‑driven productivity, or renewed trade tensions could significantly weaken growth and destabilize financial markets. Elevated public debt and eroding institutional credibility further heighten vulnerabilities. At the same time, activity could be lifted if productivity gains from AI materialize more rapidly or trade tensions ease on a sustained basis. Fostering adaptability, maintaining credible policy frameworks, and reinforcing international cooperation are essential to navigating the current shock while preparing for future disruptions in an increasingly uncertain global environment. As Chapter 2 shows, scaling up of defense spending prompted by a rise in geopolitical tensions could boost economic activity in the short term but also bring about inflationary pressures, weaken fiscal and external sustainability, and risk crowding out social spending, which could in turn ignite discontent and social unrest. As Chapter 3 demonstrates, where conflict erupts, acute macroeconomic trade-offs and scarring follow and last well beyond the immediate wartime shock. The estimates and projections in the April 2026 World Economic Outlook Chapter 1 and Statistical Appendix are based on statistical information available through April 1, 2026, but may not reflect the latest published data in all cases.The compiled full report (PDF) of the April 2026 World Economic Outlook will be available online by April 30, 2026.Chapter 1: Global Prospects and PoliciesThe global economy is again disrupted, this time with the outbreak of war in the Middle East. Rising commodity prices, firmer inflation expectations, and tighter financial conditions are testing the recent resilience. Under the assumption of a limited conflict, global growth is projected at 3.1 percent in 2026 and 3.2 percent in 2027, below recent outcomes and well under prepandemic averages. Global inflation is expected to tick up in 2026 and resume its decline in 2027. Pressures are concentrated in emerging market and developing economies, especially commodity importers with preexisting vulnerabilities. Risks are decisively on the downside. A prolonged conflict, deeper geopolitical fragmentation, disappointment over AI-driven productivity, or renewed trade tensions could weaken growth and unsettle markets. High public debt and eroded policy buffers add vulnerability. Policies should foster adaptability, enhance credibility, and reinforce international cooperation.Chapter 2: Defense Spending: Macroeconomic Consequences and Trade-OffsDefense spending is rising amid intensifying geopolitical tensions. This chapter finds that large defense spending booms have become more frequent, especially in emerging market and developing economies. In a typical boom, defense outlays increase by about 2.7 percentage points of GDP over two-and-a-half years, with roughly two-thirds financed through deficit. While defense buildups can boost economic activity in the short term, they also temporarily increase inflation and create significant medium-term challenges. Fiscal deficits worsen by about 2.6 percentage points of GDP, public debt increases by about 7 percentage points within three years, and external balances deteriorate. Wartime booms are especially costly, with public debt jumping by about 14 percentage points and social spending falling. Defense spending multipliers are close to 1, on average, but vary widely depending on how spending is sustained, financed, and allocated and how much equipment is imported.Chapter 3: The Macroeconomics of Conflicts and RecoveryArmed conflicts generate profound macroeconomic consequences beyond their devastating human toll. This chapter leverages global data on post–World War II conflicts to assess the economic implications of wars. The analysis shows that conflicts generate large and persistent output losses in economies where fighting occurs—exceeding those from financial crises or severe natural disasters—alongside nonnegligible spillovers to other countries. These losses trigger acute macroeconomic trade-offs across monetary, fiscal, and external sectors and leave long-lasting scars. Economic recoveries are slow and uneven, depending critically on sustained peace. Even when peace holds, recoveries remain modest relative to wartime losses, led primarily by labor, while capital and productivity stay subdued. Early macroeconomic stabilization, debt restructuring, international support, and domestic reforms to rebuild institutions are essential. Comprehensive policy packages that jointly reduce uncertainty and rebuild capital stock generate positive externalities for stronger recovery.
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