The International Monetary Fund (IMF) slashed its global forecast war as a result of the war in Iran and presented different scenarios based on the duration of the conflict.
Concretely, the organization now has a base scenario in which the global economy will grow by 3.1% this year, a 0.2% downgrade compared to its previous outlook. Had the war not taken place, the IMF would have upgraded it to 3.4% due to increased investment in technology, lower interest rates, fewer tariffs and fiscal support in some countries, Reuters noted.
However, the conflict has impacted the forecast, which the IMF now says depends on how long the war lasts. The "reference scenario" sees 3.1% growth and a short-lived conflict with oil prices going back to about $82 a barrel.
An "adverse" one would see prices at about $100 during 2026 and at $75 in 2027. In this case growth would decrease to 2.5% this year.
The worst-case scenario sees a "severe scenario" in which global growth is reduced to 2%. "This would mean a close call for a global recession," the IMF said.
IMF Chief Economist Pierre-Olivier Gourinchas told Reuters that central banks may need to "inflict a lot more pain to get the same disinflation result" as after the pandemic. However, this will also depend on the duration of the conflict in Iran.
However, warnings increase about the impact the disruption in global energy markets could have in the global economy.
International Energy Agency head Fatih Birol said on Tuesday that current oil prices don't fully show the gravity that energy markets face.
Speaking at the Semafor World Economy conference in Washington, Birol said that if the Strait of Hormuz is not opened soon oil prices could be much higher than the current ones.
The warning echoes that of the agency, which has warned that global oil demand is now expected to decline in 2026, marking a sharp reversal from earlier projections as disruptions continue.
The agency revised its outlook amid escalating geopolitical tensions and supply disruptions in one of the world's most critical oil transit routes. Handling roughly a fifth of global seaborne oil flows, it has become a focal point of market instability following recent conflict-related disruptions in the region.
Reuters reported that the revised outlook reflects both reduced supply availability and weaker consumption in key regions, particularly in Asia, where refiners and industrial buyers are adjusting to tighter crude flows and elevated transport risks.
