The International Monetary Fund (IMF) has revised its forecast for global economic growth, attributing the adjustment to the energy shock from the Iran conflict. Despite the challenges, investments in artificial intelligence and other technologies are helping to mitigate the impact.
The IMF now projects the global economy to grow by 3% in 2026. This is a decrease from 3.5% last year and the 3.1% forecasted earlier this year. However, the IMF anticipates a rebound to 3.4% in global growth next year.
Iran’s response to U.S. and Israeli attacks, which included closing the Strait of Hormuz, has caused significant disruptions. This strait is vital for the transit of a significant portion of the world’s crude oil and natural gas. Consequently, energy prices have surged, affecting businesses and consumers.
The IMF forecasts oil prices will rise by nearly 32% this year, with global consumer prices increasing by 4.7% in 2026. This marks a stall in progress against inflation, which was at 4.1% in 2025.
The assumptions made by the IMF include the reopening of the Strait of Hormuz later this month, despite ongoing U.S. strikes and President Donald Trump’s declaration of an end to the ceasefire with Iran. The forecast suggests commerce will normalize by next March.
The world economy has weathered the shock from the war better than feared, according to Petya Koeva Brooks, deputy director of the IMF’s research department.
Countries were able to draw from existing oil stockpiles, and oil-exporting nations outside the Persian Gulf increased production, thus limiting economic damage.
Countries with domestic energy production and benefiting from AI investments, such as the United States, appear less affected by the war’s economic impact. The IMF predicts the U.S. economy will grow by 2.3% this year, driven by tax cuts, productivity gains, and a strong stock market.
The 21 European nations using the euro are forecast to grow only by 0.9% this year due to the high energy costs, down from 1.4% in 2025. Meanwhile, China is anticipated to expand by 4.6%, despite energy price pressures and property market issues.
China’s growth benefits from investments in public works, high-tech manufacturing, and a surge in exports. India remains the fastest-growing major economy with a 6.4% growth rate, supported by robust consumer spending.
The IMF, which includes 191 nations, focuses on promoting economic growth, financial stability, and reducing global poverty.