Advertisement
International Monetary Fund (IMF)
World

IMF sees world economy growing just 3% this year amid Iran war

The outlook is weighed down by the Iran war but helped by AI and other technologies

2-MIN READ2-MIN
Listen
Delegates walk to the entrance of the International Monetary Fund headquarters during the World Bank/IMF Spring Meetings in Washington in April. The IMF now expects the global economy to expand by a sluggish 3 per cent in 2026, down from 3.5 per cent last year. Photo: AP
Associated Press

The International Monetary Fund (IMF) on Wednesday modestly downgraded its outlook for the world economy this year, citing the energy shock caused by the Iran war.

But the fallout from the conflict is being partially offset by booming investment in artificial intelligence and other technologies.

The IMF now expects the global economy to expand by a sluggish 3 per cent in 2026, down from 3.5 per cent last year and from the 3.1 per cent it had forecast for this year back in April. The fund expects worldwide growth to rebound to 3.4 per cent next year.

Iran responded to US and Israeli attacks February 28 by shutting down the Strait of Hormuz, through which a fifth of the world’s crude oil and natural gas passes. Energy prices soared, squeezing businesses and consumers.

The IMF now expects oil prices to be up nearly 32 per cent this year and for global consumer prices overall to increase 4.7 per cent in 2026. That would be up from 4.1 per cent in 2025 and would mean that two years of progress against inflation have stalled.

01:25
US strikes over 80 Iranian targets, after attacks on ships in Strait of Hormuz
The IMF forecasts assume that the Strait of Hormuz reopens later this month – even though US strikes on Iran resumed and President Donald Trump declared on Wednesday that a ceasefire with Iran was over. They also assume that commerce through the strait returns to normal by next March.
Advertisement
Select Voice
Select Speed
1.00x