IMF reduces 2026 global growth forecast on Mideast war

IMF reduces 2026 global growth forecast on Mideast war
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The International Monetary Fund (IMF) has lowered its global economic growth forecast as tensions between the United States and Iran have driven up energy and food costs globally.

The IMF said on Tuesday that it expected the global economy to grow by 3.1 percent this year, a slowdown from its earlier forecast of 3.3 percent, which it had released before the US and Israel began their war on Iran on February 28.

The new report also marks a slowdown from last year, in which the economy expanded by 3.4 percent. Some regions and countries will be hit harder than others, the IMF said.

For the Middle East and North Africa, the 2026 growth forecast was cut by 2.8 points to 1.1 percent. The IMF slashed its 2026 forecast for the Middle East and Central Asia by 2 percentage points to 1.9 percent.

Meanwhile, in the eurozone, growth is now seen slowing to 1.1 percent this year from 1.4 percent in 2025 and below the 1.3 percent predicted in January.

The lower forecasts were released as the costs of oil, gas and fertilisers surge alongside a slowdown in traffic in the Strait of Hormuz, through which roughly 20 percent of the world’s oil and liquefied natural gas supplies travel.

The IMF said it anticipates higher global inflation at 4.4 percent, up 0.6 percentage points from its January forecast.

The IMF shaved its US growth outlook for this year to 2.3 percent, down just a tenth of a percentage point from January.

Experts argued that continued strains in the Strait of Hormuz could worsen inflationary pressures in the months to come.

Petrol prices have continued to rise in the US with the average price for a gallon (3.78 litres) at $4.11, up from $2.98 on February 28 when the US and Israel attacked Iran, according to the American Automobile Association, which tracks daily petrol prices.