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The International Monetary Fund has said the “economic scars” of war could take more than a decade to recover from, as it warned governments around the world will face hard choices to boost defence spending.

After the news of the Iran ceasefire, and ebullient reaction in financial markets, the IMF has published a timely report that could douse some of that enthusiasm.

Indicating that things could still take quite a while to patch together again, the fund notes the economic costs of war typically exceed those associated with financial crises or severe natural disasters. Economics scars also persist even a decade later.

When conflict ends and gives way to a durable peace, economic recovery is possible, but it is neither automatic nor rapid.

Publishing a report ahead of its annual spring meetings in Washington next week, the IMF research based on conflicts since 1946 shows that “conflict site” countries – perhaps unsurprisingly – suffer particularly steep economic declines. But other countries can still feel the pain for a lengthy period of time afterwards.

While much of the scarring comes from the damage to infrastructure, human toll, and the financial repair job, the IMF also warns peacetime can be tougher to maintain after periods of conflict, depressing investment intentions amid the cloud of uncertainty.

In pre-released chapters of its World Economic Outlook report, due next week, it says economic output typically rebounds after the last bombs fall, but remains modest relative to wartime losses.

The analysis is about wars generally. But passages of the report highlight the potential consequences of the uncertainty over the situation in the Middle East – which analysts reckon could cast a lasting shadow over the global economy.

Persistent political and economic uncertainty despite peace can continue to depress expected returns on investment, sustain capital outflows, and constrain both investment and labor supply.

Meanwhile the fund warns governments face “hard choices” to raise spending on defence. Amid the clamour to do so, there are three choices: higher borrowing, tax hikes, or a “guns versus butter” trade-off involving cuts to social protection, health and education.

For the UK and other Nato members committed to spending 5% of GDP on defence by 2035, it is a sobering reminder that boosting defence spending is not as easy as some make it out to be.

The IMF also cautions that a defence boom does not automatically translate into an economic one. Nations which stimulate their domestic defence manufacturing capacity can benefit. But, typically, buying guns, ammo and associated kit involves boosting imports from places with existing capacity (NB: Mostly the US).

Nearly half of total arms revenue among the world’s top 100 arms-producing firms is generated in the United States, while Europe accounts for about 14% and China 12%. As a result, most countries import a large share of their military equipment, with this ratio as high as 80% for European Union member countries.