WASHINGTON, April 14 (V7N) – The International Monetary Fund (IMF) lowered its 2026 global growth projection Tuesday, warning that the Middle East war could derail the world economy as commodity markets reel from soaring prices.  

Global growth is now forecast at 3.1 percent, down from 3.3 percent in January before US-Israeli strikes on Iran triggered a wider conflict. “We were planning to upgrade growth for 2026 to 3.4 percent if not for the war,” IMF chief economist Pierre-Olivier Gourinchas said.  

Oil, gas, and fertilizer prices have surged as Iran blocked traffic through the Strait of Hormuz and the US imposed a naval blockade on Iranian ports. Inflation is expected to rise to 4.4 percent this year, 0.6 points higher than earlier forecasts. Gourinchas cautioned that if energy disruptions persist, growth could slow to 2.5 percent or even 2.0 percent — levels seen only during crises such as the 2008 financial crash and the Covid-19 pandemic.  

The IMF highlighted uneven impacts, with emerging markets and low-income energy importers hit hardest. Growth in the Middle East and Central Asia was cut to 1.9 percent, while Saudi Arabia’s forecast dropped to 3.1 percent. US growth is projected at 2.3 percent, benefiting marginally from higher energy prices, while China’s growth is expected to cool to 4.4 percent. Euro area growth was revised down to 1.1 percent, and UK growth to 0.8 percent.  

The IMF warned that inflation expectations may not be as well anchored as before, raising the risk of more persistent price pressures. “If that happens, central banks might need to step in and raise interest rates to cool the economy, despite the ongoing negative supply shock,” Gourinchas said.  

END/WD/RH