The International Monetary Fund (IMF) revised its global economic growth forecast downward on Wednesday, citing disruptions from the ongoing conflict involving Iran as a significant factor. The IMF now anticipates the world economy will grow by 3% in 2026, a reduction from its previous forecast of 3.1% made in April and lower than the 3.5% growth recorded last year. The fund projects a rebound to 3.4% growth in 2027.
The adjustment stems largely from the energy shock triggered by Iran’s actions earlier this year. Following U.S. and Israeli attacks on February 28, Iran closed the Strait of Hormuz, a strategic waterway responsible for the transit of approximately 20% of the world’s crude oil and natural gas supplies. This closure led to a sharp rise in energy prices, increasing costs for businesses and consumers globally.
The IMF estimates that oil prices have surged nearly 32% in 2026 as a result of these disruptions. The elevated energy prices have added inflationary pressures to the global economy, contributing to higher consumer price levels worldwide.
Despite these challenges, the IMF highlighted that robust investment in artificial intelligence and other advanced technologies has provided some offset to the adverse effects of the energy crisis. These technological developments are boosting productivity and supporting economic activity in various sectors, helping to temper the overall economic slowdown.
The fund’s latest outlook reflects a cautious assessment of the near-term risks posed by geopolitical tensions and the evolving energy market while acknowledging areas of innovation-driven growth that could support a recovery in the coming years.