The International Monetary Fund has modestly trimmed its forecast for global economic growth this year, while warning that a prolonged conflict with Iran could inflict far greater damage on the world economy. According to Antigua News Room, which cited CNN reporting, the IMF cautioned that an escalating war could trigger an energy crisis of historic proportions.
"The global outlook has abruptly darkened following the outbreak of war in the Middle East," wrote Pierre-Olivier Gourinchas, the IMF's economic counsellor, in the fund's latest World Economic Outlook report. He added that the conflict could still cause a global "energy crisis on an unprecedented scale."
The IMF now projects global growth of 3.1% in 2026 — a 0.2 percentage point downgrade from its January forecast. That revision assumes the war remains "relatively short-lived." Global inflation is expected to rise to 4.4% this year.
The fund also outlined two scenarios accounting for a longer-lasting conflict. Under the more severe of these — in which oil and natural gas prices spike between 100% and 200% relative to January levels and remain elevated into 2027 — global economic growth could fall to just 2% this year.
The IMF described that outcome as "a close call for a global recession," noting that economic growth below 2% has occurred only four times since 1980.
Prior to the war's outbreak, the global economy had been performing better than expected, with growth on track for an upward revision. One partial bright spot: the downward revision was offset in part by reduced US tariff rates compared with last year, the IMF noted.
