The International Monetary Fund (IMF) has lowered its global economic growth forecast for 2026, warning that the recent conflict involving Iran and the resulting disruption to energy markets have weakened the outlook for the world economy. The IMF said higher oil prices, supply chain disruptions, and increased geopolitical uncertainty have all contributed to slower expected growth.
According to the IMF, global growth is now projected at 2.8% in 2026, down from its earlier forecast of 3.1%. The organisation said the downgrade reflects the economic impact of the Iran conflict, tighter financial conditions, and weaker investment and consumer confidence in many regions.
The IMF noted that the fighting around the Strait of Hormuz a key route for global oil shipments triggered sharp increases in energy prices, raising production and transportation costs worldwide. Countries that rely heavily on imported fuel are expected to face higher inflation and slower economic activity as a result.
The fund also warned that developing economies could be hit particularly hard, as many are already struggling with high debt, rising borrowing costs, and weaker export demand. Advanced economies, including the United States and many European countries, are also expected to experience slower growth because of higher energy costs and continued uncertainty in global markets.
Despite the downgrade, the IMF said the outlook could improve if geopolitical tensions ease, energy prices stabilise, and governments continue implementing policies to support investment and control inflation. However, it cautioned that any renewed escalation in the Middle East could further weaken global economic growth and increase financial market volatility.