The International Monetary Fund (IMF) has revised its forecast for the rest of 2026, setting global growth at a lowly 3% due to the aftershocks of the still unresolved Iran war.
The IMF in April said global growth would be around 3.1%, but later revised its forecast downward. Last year, the global economy was up 3.5%. However, the IMF also expects a rebound in 2027, with a tentative forecast of 3.4% growth.
The eurozone is going to be among the economies with lower growth in 2026. The new forecast is for a sluggish 0.9%, down from 1.4% in 2025. Also, China will experience a slower growth, 4.6% from 5% in 2025, but the IMF noted a stronger response than they expected.
Both the eurozone and China are suffering the energy shocks that have been the new normal since the coordinated attack of the US and Israel against Iran prompted Tehran to shut down the Strait of Hormuz, where around one-fifth of the world’s crude oil and natural gas passes.
The closure sent oil and gas prices higher, making it difficult for businesses and customers in areas that import most of their energy. The IMF calculated a nearly 32% jump in oil prices during the year, resulting in a 4.7% rise in global consumer prices.
Despite causing the energy crisis, the US is among those countries not affected by slower growth. The IMF still expects the US to grow 2.3% in 2026, up from 2.1% in 2025. This is due to the US being a producer and exporter of energy, as well as the high investments in AI that the country is making.
