IMF Cuts Global Growth Outlook Amid Iran War Risks
The International Monetary Fund (IMF) lowered its global growth forecast on Tuesday, pointing to rising energy prices and supply disruptions caused by the ongoing Iran war. The institution warned that the global economy could move closer to a recession if the conflict escalates and oil prices remain above $100 per barrel through 2027.
Three Economic Scenarios Based on Conflict Outcome
During its spring meetings in Washington alongside World Bank officials, the IMF presented three potential growth scenarios. These include a reference scenario, an adverse case, and a severe scenario, all based on how the Middle East conflict develops.
Base Case: Moderate Growth with Lower Oil Prices
In its most optimistic reference scenario, which assumes the Iran war remains short-lived, the IMF forecasts global GDP growth of 3.1% in 2026. This represents a downward revision of 0.2 percentage points from its January estimate.
Under this scenario, oil prices are expected to average around $82 per barrel in 2026, easing from recent levels near $100 for Brent crude.
Growth Would Be Stronger Without the Conflict
The IMF noted that without the geopolitical tensions in the Middle East, it would have actually increased its global growth forecast by 0.1 percentage point to 3.4%.
This stronger outlook would have been supported by continued investment in technology, lower interest rates, reduced pressure from U.S. tariffs, and fiscal support measures in several economies.
IMF: Iran War Poses Greater Risk Than Tariffs
IMF Chief Economist Pierre-Olivier Gourinchas emphasized that the economic risks from the Iran war are significantly larger than those posed by U.S. tariffs introduced a year earlier under President Donald Trump.
He highlighted that the scale of disruption in the Gulf region could have far-reaching consequences for global markets and economic stability.
Rising Uncertainty for the Global Economy
According to the IMF, developments in the Gulf region represent a major source of uncertainty. The institution’s scenarios reflect the potential for escalating risks, particularly if energy markets remain volatile and supply disruptions persist.
