The IMF downgraded its forecast for global growth to 3.1% in 2026 from the 3.3% it had forecast back in January. The expected growth would mark a deceleration from a 3.4% expansion in 2025.
U.S. and Israeli strikes on Iran — and Tehran’s closing of the Strait of Hormuz and retaliatory strikes on oil refineries and other energy infrastructure in neighboring countries — have driven oil and gas prices sharply higher around the world.
As a result, the IMF marked up its expectation for global inflation this year to 4.4% from 4.1% in 2025 and from the 3.8% it had forecast for this year in January.
Until the war, the world economy had shown surprising resilience in the face of President Donald Trump’s protectionist policies, which built a wall of import taxes around the United States, the world’s biggest economy and once a market practically wide open to imports. The damage was less than feared partly because Trump’s tariffs last year ended up being lower than what he’d originally announced.
