IMF warns of slower global growth after US-Iran conflict escalates

The International Monetary Fund (IMF) has lowered its global economic growth forecast for 2026, citing the continuing impact of higher energy prices linked to the conflict involving Iran.

In its latest World Economic Outlook released on Wednesday, the IMF said the global economy is now expected to grow by 3 percent in 2026, down from its April forecast of 3.1 percent.

Growth is forecast to recover to 3.4 percent in 2027, while global inflation is expected to reach 4.7 per cent this year before easing to 3.9 per cent in 2027.

The IMF said the downgrade reflects uncertainty following renewed US military strikes on Iran and disruption to energy markets.

Speaking at a news conference, IMF Deputy Research Director Petya Koeva Brooks said: “The global outlook is being shaped by two powerful forces pulling in opposite directions: the lingering effects of the energy shock from the war in the Middle East and a technology-driven investment boom.”

“Developments overnight illustrate the uncertainty and risks that surround the outlook”, she added.

According to the IMF, its projections assume shipping through the Strait of Hormuz begins returning to normal from mid-July.

The report comes as Brent crude climbed sharply following renewed tensions in the region