Washington: The International Monetary Fund has lowered its global growth forecast for 2026, cautioning that an escalation of the ongoing conflict involving Iran could push the world economy toward a recession.
In its latest World Economic Outlook, the IMF projected global growth at 3.1 percent for the year, down from its earlier estimate of 3.3 percent. The revision reflects mounting uncertainty caused by geopolitical tensions, particularly the impact of military developments and trade disruptions in West Asia.
According to IMF Chief Economist Pierre-Olivier Gourinchas, the outlook would have been stronger if not for the conflict, with growth potentially reaching 3.4 percent. However, the ongoing crisis has driven up prices of key commodities such as oil, gas and fertilizers, adding pressure on inflation and supply chains.
A major concern is the disruption of shipping through the Strait of Hormuz, a critical global route for energy supplies. Restrictions and blockades in the region have intensified fears of a prolonged energy shock, which could significantly slow economic activity worldwide.
The IMF now expects global inflation to rise to 4.4 percent this year, higher than previously forecast. While inflation had been easing in recent years, the current situation risks reversing that trend, especially if energy prices remain elevated for an extended period.
In a worst-case scenario, the IMF warned that global growth could fall to between 2.0 and 2.5 percent, levels historically associated with major economic downturns such as the global financial crisis and the pandemic period.
The impact is expected to be uneven, with emerging and developing economies likely to face greater strain than advanced nations. Higher fuel and fertilizer costs could also lead to increased food prices, placing additional pressure on vulnerable populations.
The IMF stressed that the trajectory of the global economy will largely depend on how the conflict evolves, urging close monitoring as risks to growth and stability remain high.
