IMF cuts global growth forecast to 3% as Iran war lifts energy costs

IMF sees global inflation rising to 4.7% in 2026

WASHINGTON — The International Monetary Fund on Wednesday downgraded its forecast for global economic growth this year to 3%, citing the energy shock from the war with Iran, according to the fund’s latest World Economic Outlook update.

The IMF now expects the global economy to expand by a sluggish 3% in 2026, down from 3.5% last year and from the 3.1% it had forecast for the year in April. The fund projected worldwide growth would rebound to 3.4% in 2027.

The conflict’s economic toll stems largely from Iran’s closure of the Strait of Hormuz after U.S. and Israeli attacks on Feb. 28. The waterway carries a fifth of the world’s crude oil and natural gas. Energy prices soared, squeezing businesses and consumers. The IMF said oil prices will average about 32% higher this year compared with 2025, and global consumer prices overall will rise 4.7% in 2026 — up from 4.1% in 2025 and effectively halting two years of progress against inflation.

The fund’s forecasts assume that the Strait of Hormuz reopens later this month and that commerce through the strait returns to normal by next March, even as President Donald Trump declared Wednesday that the ceasefire with Iran was over and U.S. strikes on Iran resumed.

Partially offsetting the war’s drag, the IMF said booming investment in artificial intelligence and other technologies is supporting global growth.