Jim Chalmers will head to Washington on Wednesday to discuss the economic maelstrom with international counterparts at the IMF-World Bank Spring Meetings.
He said it was a "really dangerous time" for the global economy after the IMF's latest World Economic Outlook said the world was in for more financial pain without a speedy resolution to the conflict.
"The IMF is sounding the alarm on some pretty severe scenarios published overnight," Dr Chalmers told reporters in Brisbane before his departure.
"Australia is better placed and better prepared than a number of other countries. We won't be spared the fallout from this very substantial economic shock."
The IMF revised its economic growth projections for Australia slightly down from January.
The national GDP growth rate is expected to come in at two per cent in 2026, down from 2.1 per cent, and 1.7 for 2027, from 2.2 per cent.
But Australia's inflation outlook was revised significantly higher, with consumer price growth of four per cent in 2026 exceeding most advanced economies, including the US, the UK and New Zealand.
The IMF had been preparing to revise its growth forecasts upwards before the war.
But the closure of the Strait of Hormuz and attacks on oil and gas facilities halted the positive momentum and raised the prospect of a major energy crisis should hostilities continue.
"From an economic point of view, the end of the war can't come soon enough," Dr Chalmers said.
"But even when the strait is properly reopened, and even when the hostilities formally end in an enduring way, we still expect the consequences of this war in the Middle East to be felt for some time."
Under a severe scenario, in which an extended conflict results in more damage to energy infrastructure, global growth would fall to two per cent in 2026 and perilously close to a global recession.
IMF chief economist Pierre-Olivier Gourinchas said governments should refrain from wasteful and untargeted fiscal measures such as energy caps or subsidies, designed to ease cost pressures for households and businesses.
"While such measures are popular, evidence suggests they are often both poorly designed and very costly for the public purse," he said.
"Moreover, avoiding fiscal stimulus at a time of rising inflation is another critical component so as not to complicate the task of central banks."
Dr Chalmers said the upcoming federal budget will strike a balance between immediate pressures and meeting international obligations.
"I'm confident that this budget, which will be focused on fuel security, supply chain, resilience and economic reform, will balance those key considerations," he said.
Economists have warned the Albanese government's cuts to the fuel excise would keep inflation higher for longer and would diminish price signals encouraging Australians to preserve fuel by driving less, catching public transport or riding a bike, for example.
"Preserving price signals is important: high prices signal scarcity, encouraging demand restraint and supply expansion," Mr Gourinchas said.
He urged central banks to look through the surge in energy prices, as long as inflation expectations remained well anchored and monetary policy settings were already calibrated.
On inflation expectations, RBA deputy governor Andrew Hauser noted in a speaking event in New York on Tuesday that inflation expectations were picking up in the short term, but remained anchored long term.
However, he admitted he was not confident rates were at the right level.
Looking beyond the conflict, the AI revolution promised hope of higher economic growth, productivity and ultimately living standards, but the scars of war would be long-lasting, the IMF said.
