The IMF lowers its 2026 global economic growth forecast to 3.1%

The International Monetary Fund (IMF) projected on April 14 that the world economy will grow by 3.1% in 2026, assuming an early end to the Middle East conflict. This is a 0.2 percentage point downward revision from its January forecast. The IMF warned that if high oil prices persist, the growth rate will slow to around 2%.

The outlook for the US-Iran conflict, which is driving up energy prices, remains unpredictable. The IMF estimated the impact under three scenarios.

The baseline scenario is a resolution to the conflict within weeks and the end of chaos by mid-2026. This scenario assumes that the average international oil price will reach $82 per barrel in 2026, a 21% increase from the previous year.

Consumer prices are projected to rise by 4.4% in 2026, a 0.6 percentage point increase from the January forecast. The global growth rate is projected at 3.4% in 2025, slowing to 3.1% in 2026 due to renewed inflation, before remaining unchanged at 3.2% in 2027.

Emerging market countries are particularly affected by rising energy prices. The IMF projects emerging market growth at 3.9% in 2026, a downward revision of 0.3 percentage points. Energy inefficiency and capital outflow pressures will be stumbling blocks to economic growth. The downward revisions are particularly significant in the Middle East and Africa, which are directly affected by conflict.

China’s growth forecast was lowered by 0.1 percentage points from January to 4.4%. India’s growth forecast was raised by 0.1 percentage points to 6.5%. This is because the effects of Trump’s tariff reductions will offset the burden of higher energy prices.

The growth rate forecast for developed countries remains at 1.8%. Japan’s is 0.7%, unchanged from January. The US forecast was lowered by 0.1 percentage points to 2.3%, but still remains the highest growth rate among the G7 countries.

The negotiations between the US and Iran on March 11-12, which reached an agreement on a temporary ceasefire, broke down. On March 12, US President Trump announced the US military’s blockade of the Strait of Hormuz. The risk of renewed conflict remains, and the situation remains uncertain.

In addition to the baseline scenario, the IMF has also proposed scenarios considering the protracted nature of the dispute and the expansion of losses. The most severe scenario assumes that oil prices will surge to around $110 in 2026 and continue to rise to around $125 in 2027.

In this scenario, global price increases will rise to 5.8% in 2026 and 6.1% in 2027, reaching the highest level since 2023, when factors such as the Ukraine crisis led to sustained inflation. High oil prices will drag down the global economy, slowing growth to around 2% in 2026, considered a threshold for a global recession. Growth in 2027 will also be only 2.2%, lacking strong momentum.

Inflation expectations will strengthen, and central banks in various countries and regions will implement monetary tightening measures. IMF analysis states that the impact of the dispute will expand, becoming a heavy burden on the real economy, primarily in emerging market countries.

The IMF also released its economic outlook for the Middle East assuming no conflict. Against the backdrop of robust investment in artificial intelligence (AI), it projects growth of 3.4% in 2026, 0.1 percentage points higher than its January forecast.