The International Monetary Fund (IMF) has reduced its forecast for global economic growth in 2026 to 3.0%, down 0.1 percentage point from its April projection, citing the ongoing war in the Middle East and other risks to the recovery [1, 2, 3, 4]. The conflict, which began on February 28, 2026, when Iran closed the Strait of Hormuz in response to US and Israeli attacks, has sharply increased energy prices by about 25% and disrupted global supply chains [1, 5, 6, 7]. The IMF assumes the Strait of Hormuz will begin reopening in mid-July 2026, reaching prewar shipping levels by March 2027 [1, 5, 6, 7].
Global inflation is now expected to rise to 4.7% in 2026, up from an earlier forecast of 4.4%, though it is projected to ease to 3.9% in 2027 [1, 2, 3, 8, 5]. The IMF also forecasts global trade growth to slow sharply to 3.5% this year from 5% in 2025 before recovering to 4.3% in 2027 [1, 2, 8, 5]. The Fund highlighted risks from trade fragmentation and volatile market expectations linked to artificial intelligence, which could further hinder growth [1, 8, 5, 9].
Countries integrated into technology and AI sectors are expected to outperform economically, while commodity importers not benefiting from AI face downgraded outlooks [1, 2, 10, 5]. The IMF kept its 2026 US growth forecast steady at 2.3%, revised China's growth upward to 4.6%, and lowered eurozone growth to 0.9% [2, 11, 9, 12, 6].
IMF Deputy Director of Research Petya Koeva Brooks said, "The global economy as a whole has, so far, weathered the shock from the war better than feared" [1]. However, she also noted that recent developments in the Middle East highlight heightened uncertainty and risks for the outlook [10]. Deniz Igan, IMF Research Department Chief, described the 2027 rebound as a potential "V-shaped recovery" but warned that delayed recovery and longer-term supply disruptions are among the reasons for worsening economic damage from the Iran conflict [10, 7].
The global economy has shown resilience due to strategic oil releases, diversification of supply routes, and robust AI-driven demand offsetting some energy shocks [1, 3, 4]. But the IMF cautioned that renewed conflict could exacerbate supply constraints and inflation pressures [1, 2, 3].
The IMF presented its updated World Economic Outlook on July 8, 2026, incorporating revised growth and inflation projections alongside risk warnings tied to geopolitical tensions and shifting economic dynamics [s1-s12].
