IMF Slashes Global Growth Forecast to 3.1% Following Outbreak of War in Iran

The IMF cut its 2026 global growth forecast to 3.1 percent, down from 3.3 percent projected in January, citing the war in the Middle East that began on February 28, 2026, when the United States and Israel launched strikes on Iran. The revision marks a step back from the 3.4 percent expansion recorded in 2025, and represents a sharp departure from the trajectory the Fund had been tracking before the conflict erupted. Pierre-Olivier Gourinchas, the IMF's chief economist, wrote in the quarterly World Economic Outlook report that the war had derailed a period of sustained expansion. „The outbreak of war in the Middle East on February 28, 2026, has abruptly overshadowed the global outlook. The war truncated what had been a trajectory of uninterrupted growth.” — Pierre-Olivier Gourinchas via The New York Times The report was released as global policymakers gathered in Washington for the IMF and World Bank spring meetings, an event that had been expected to center on trade tensions and artificial intelligence but was overtaken by the economic fallout from the conflict.

Inflation jumps as Hormuz blockade drives energy prices higher Global inflation for 2026 is now projected at 4.4 percent, up from the 3.8 percent forecast in January and above the 4.1 percent recorded in 2025, as oil and gas prices surged following Iran's blockade of the Strait of Hormuz. The IMF's baseline scenario assumes the conflict remains relatively short-lived and that energy price disruptions begin to subside in the second half of 2026, with prices rising a moderate 19 percent across the full year. Gourinchas cautioned at a press conference that the Fund currently finds itself at an intermediate point between the baseline and the adverse scenario. „Each day that passes and each day that we have more energy disruptions, we slide towards the most adverse situation.” — Pierre-Olivier Gourinchas via France 24 The Fund outlined two darker alternatives: an "adverse" scenario in which growth falls to 2.5 percent, and a "severe" scenario in which energy crises extend into 2027, forcing central banks to raise interest rates and pushing global growth down to 2 percent in both 2026 and 2027 — a contraction comparable in scale to the 2008 financial crisis and the 2020 pandemic. Emerging economies that import raw materials and carry pre-existing fiscal weaknesses face the greatest exposure, with the Middle East, North Africa, and Central Asia region seeing its collective growth cut roughly in half. Saudi Arabia's growth forecast was revised down by 1.4 percentage points to 3.1 percent for 2026.

Spain: 2.1, United States: 2.3, Canada: 1.5, Eurozone: 1.1, Germany: 0.8, United Kingdom: 0.8, France: 0.9, Italy: 0.5, Japan: 0.7, Saudi Arabia: 3.1

Spain leads Eurozone growth but unemployment stays highest in the bloc Spain's 2026 GDP growth forecast was trimmed by 0.2 percentage points to 2.1 percent, yet the country retains the top position among major Eurozone economies, growing at more than double the rate of the currency bloc as a whole, which the IMF projects at 1.1 percent. The Spanish government moved quickly on Tuesday to highlight that positive differential, describing it as evidence of the economy's resilience and "better relative performance compared to the rest of the eurozone in an environment of high global uncertainty," according to reporting by ABC. For 2027, Spain is forecast to grow 1.8 percent, above the Eurozone average of 1.2 percent, though one tenth below the January estimate. The IMF projects Spanish inflation at 3 percent in 2026, below the Eurozone average of 2.6 percent cited by La Razón, though still six tenths higher than the Fund's January estimate for Spain. However, Spain's unemployment rate is expected to remain at 9.8 percent in both 2026 and 2027 — the highest of any country in the Eurozone, where the average is forecast to fall to 6.2 percent. The IMF also noted that when population growth is stripped out of the headline GDP figures, Spain's per capita growth advantage over the Eurozone narrows considerably, with the two converging at 0.9 percent in 2026 and Spain falling below the Eurozone average in 2027.

Spain GDP Growth Forecast — January vs April 2026: Spain GDP growth 2026 (before: 2.3% (January forecast), after: 2.1% (April forecast)); Spain GDP growth 2027 (before: 1.9% (January forecast), after: 1.8% (April forecast)); Global growth 2026 (before: 3.3% (January forecast), after: 3.1% (April forecast)); Global inflation 2026 (before: 3.8% (January forecast), after: 4.4% (April forecast))

Bessent pushes IMF to refocus as war dominates spring meetings US Treasury Secretary Scott Bessent used the opening of the spring meetings to urge the IMF to return to what he described as its core mission of promoting financial stability and addressing global imbalances, rather than expanding into areas such as climate policy. Bessent praised the World Bank for moving away from climate ambitions and toward support for nuclear energy, while suggesting the IMF needed to "lead by example" and redirect its attention. The meetings, which had been expected to focus on trade tariffs and fiscal imbalances stemming from the Trump administration's economic agenda, were instead dominated by the economic consequences of the Iran conflict. „Before the war, we were preparing to revise our forecasts upward to 3.4%.” — Pierre-Olivier Gourinchas via France 24 IMF Managing Director Kristalina Georgieva presided over an institution that, according to Gourinchas, had seen the global economy demonstrate surprising resilience against protectionist trade policies before the war broke out — resilience that the conflict has now put under severe strain. The Fund noted that even in the best-case scenario, some damage to the global economy is already locked in, and that the path back to the pre-war growth trajectory depends heavily on how quickly the situation in the Persian Gulf stabilizes.

3.7 (percent) — Historical average global growth rate, 2000–2019