IMF slashes growth outlook on Iran conflict

The global economy will grow at a slower rate in 2026, the IMF said Wednesday, as high energy prices resulting from the Iran conflict drag on growth and drive inflation.

The fund lowered its global forecast to 3%, down from April and below the last two years’ averages, but noted that the global economy avoided a sharper downturn, in part due to increased demand for AI, and projected growth would rebound in 2027.

The US Federal Reserve’s June meeting minutes showed officials were divided over the economy’s direction and where to take interest rates, reflecting uncertainty over how long energy prices from the Iran conflict will keep inflation elevated. “Cheaper oil alone won’t open the door to cuts,” Apollo’s chief economist wrote.