Key Takeaways
The IMF cut its 2026 global growth forecast to 3 percent, down from the 3.1 percent it projected in April and from 3.5 percent growth in 2025, citing the energy shock from the Iran war.
The fund expects oil prices to end the year up nearly 32 percent and global consumer prices to rise 4.7 percent, which stalls two years of progress against inflation.
The forecast assumes the Strait of Hormuz reopens later this month, an assumption published the same day President Trump declared the ceasefire with Iran over.
The International Monetary Fund cut its 2026 global growth forecast to 3 percent on Wednesday, down from the 3.1 percent it projected in April and from 3.5 percent growth last year, and it pointed at one cause, the energy shock from the Iran war. Global consumer prices are now expected to rise 4.7 percent this year, up from 4.1 percent in 2025. That number is worth sitting with, it means two years of progress against inflation has stalled.
Iran shut the Strait of Hormuz on February 28 after US and Israeli attacks, and a fifth of the world's crude oil and natural gas moves through that channel. The IMF now expects oil to end the year up nearly 32 percent. "The world economy has weathered the shock from the war better than feared," IMF research deputy director Petya Koeva Brooks told reporters Wednesday, crediting existing oil stockpiles and producers outside the Gulf that stepped up output.
The cushion is not evenly spread. The United States, which produces its own energy and is riding an AI investment boom, is still forecast to grow 2.3 percent, unchanged from April. The euro area gets 0.9 percent. The countries with the least slack import both fuel and food, and the World Food Programme has warned that disruption in Hormuz raises fertilizer costs, cuts crop yields, and lifts food prices for the 318 million people already facing crisis-level hunger.
The most notable part of this is the assumption underneath it. The forecast presumes the strait reopens later this month and that shipping normalizes by next March, and it was published the same day President Trump declared the ceasefire with Iran over and US strikes resumed. If that assumption breaks, the WFP scenario of 45 million more people pushed into acute hunger moves from model to map, and the more than $800 million the US pledged to the World Food Programme in June has to stretch across far more expensive food. Worth watching.
People Also Ask
What is the IMF's global growth forecast for 2026?
The IMF expects the global economy to grow 3 percent in 2026, down from its April forecast of 3.1 percent and from 3.5 percent growth in 2025. It projects a rebound to 3.4 percent in 2027.
Why did the IMF cut its 2026 growth forecast?
The energy shock from the Iran war. Iran closed the Strait of Hormuz in February, the IMF expects oil prices to end 2026 up nearly 32 percent, and global consumer prices are projected to rise 4.7 percent, up from 4.1 percent in 2025.
How does the Iran war affect food prices?
A significant share of the world's fertilizer supply moves through the Strait of Hormuz, so disruption there raises fertilizer and fuel costs, lowers crop yields, and pushes food prices higher. The World Food Programme says countries that import both fuel and food are hit hardest.
Is the Strait of Hormuz still closed?
Yes, and the IMF forecast assumes it reopens later in July 2026 with shipping back to normal by March 2027. US strikes on Iran resumed on July 8 and President Trump declared the ceasefire over, which puts that timeline in doubt.