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IMF: Middle East Battles Imperil Global Outlook

[ April 17, 2026   //   ]

The global economy risks being thrown off course by the war in the Middle East, with growth slowing and inflation rising as energy markets and trade flows face renewed disruption, the International Monetary Fund said.

The IMF projected global growth of 3.1 percent in 2026 and 3.2 percent in 2027, a downgrade from earlier expectations and below recent levels. The fund said growth would have been stronger – about 3.4 percent – absent the conflict.

Global inflation is now expected to rise to 4.4 percent in 2026 before easing in 2027, reflecting higher energy costs and tighter financial conditions.

The outlook assumes the conflict remains limited. But the IMF warned that risks are heavily skewed to the downside, with the potential for broader escalation to trigger a more severe economic shock.

Under an adverse scenario, global growth could fall to 2.5 percent in 2026, while a more severe disruption – particularly involving energy infrastructure – could push growth closer to 2 percent and drive inflation above 6 percent.

Emerging markets are expected to bear the brunt of the slowdown, especially commodity-importing economies already facing fiscal and financial pressures.

The warning comes as disruptions to energy flows, including through the Strait of Hormuz, have raised concerns about supply chain stability and fuel costs.

U.S. policy actions have added to uncertainty. President Donald Trump’s recent military strikes and shifting trade measures tied to the conflict have drawn scrutiny from analysts, who warn they risk amplifying volatility in energy markets and global trade flows, particularly given the strategic importance of the region to oil shipments.

The IMF said rising geopolitical fragmentation, trade tensions and high public debt levels are compounding risks, while warning that increased defense spending could boost short-term activity but fuel inflation and strain public finances over time.

The fund urged governments to maintain credible policy frameworks and strengthen international cooperation to stabilize the global economy, warning that the economic effects of conflict can persist well beyond the immediate shock.

The compiled full report of the April 2026 World Economic Outlook will be available online by April 30, at https://www.imf.org/.

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