IMF Cuts 2026 Global Growth Forecast to 3.1% Citing Iran War Impact

The IMF downgraded its global economic growth forecast for 2026 to 3.1 percent, down from 3.3 percent in January.

“The International Monetary Fund (IMF) has lowered its global economic growth forecasts for 2026 to 3”

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The reference forecast assumes the conflict will be limited in duration, intensity, and scope.

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Global headline inflation is expected to rise to 4.4 percent in 2026, up from 4.1 percent in 2025.

Energy commodity prices are projected to increase by 19 percent, including a 21.4 percent rise in oil prices.

The IMF warned that the impact on emerging market and developing economies would be almost twice that on advanced economies.

The U.S. economy is projected to grow by 2.3 percent in 2026.

The IMF forecast the UK would suffer the sharpest growth downgrade among advanced economies.

The estimate for 2026 was cut to 0.8 percent from 1.3 percent.

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UK inflation was forecast to pick up temporarily to around 4 percent.

Chancellor Rachel Reeves acknowledged the costs the war would impose on the UK.

The IMF raised its forecast for Russia's economic growth to 1.1 percent.

The IMF outlined more severe downside scenarios.

“UK faces biggest hit to growth from Iran war of major economies, IMF says The energy shock from the Iran war will hit the UK the hardest of the world's advanced economies, the International Monetary Fund (IMF) has forecast”

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In an adverse case, global growth could fall to 2.5 percent.

In a worst-case scenario, growth could slow to around 2 percent.

The IMF cautioned that risks remain tremendous.

The Fund urged countries to cooperate and take coordinated actions.

The IMF warned that trade restrictions can worsen output.

The global economy was already navigating a transition to a new trade system.

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Inflation expectations remain a key concern.

The Fund recommended targeted and temporary support measures.