US EditionGlobal economy at risk of recession if Iran war persists, warns IMF
The fund said a severe conflict could cut global growth to 2% and push inflation above 6%, with energy prices already climbing.
- On Tuesday, The International Monetary Fund warned that the global economy teeters on the brink of recession due to the Iran war, cutting its growth outlook as energy prices spike and supply chains disrupt.
- Energy prices have soared since the war began more than six weeks ago after the key Strait of Hormuz shipping route effectively closed and peace talks involving Iran failed.
- Under a worst-case 'severe scenario', the IMF projects oil prices reaching an average $110 per barrel this year and $125 in 2027, potentially slashing global growth to 2.0 per cent.
- IMF chief economist Pierre-Olivier Gourinchas warned the Gulf conflict is 'potentially much, much larger' than previous tariff disputes, with Middle East and Central Asia GDP forecast to fall 1.9 per cent.
- Central banks may need to 'step on the brakes' to contain inflation if price expectations shift, Gourinchas noted, though policymakers might 'look through' short-lived energy spikes if expectations remain anchored.
42 Articles
42 Articles
IMF warns of global recession risk if Iran war escalates
The International Monetary Fund warned that if the war in Iran escalates, it could further raise oil, gas, and food commodity prices, putting the global economy at risk of a recession. The IMF published its April 2026 World Economic Outlook titled “Global Economy in the Shadow of War” on Tuesday, warning that the state of the global economy in the face of the Iran war will “crucially depend on the conflict’s duration, intensity, and scope,” whic…
‘Energy shock cannot turn into persistent inflation’, says economist-leader of the International Monetary Fund, Pierre-Olivier Gourinchas
As after the subprime mortgage crisis and after Covid's pandemic. Once again the global economy risks derailing, this time under the effect of the war in the Middle East. In the World Economic Outlook presented on Tuesday, the International Monetary Fund warns that, in the worst scenario, extensive damage to energy infrastructure and a prolonged conflict this year's global growth could fall to about 2%, 1.3 points below the previous forecasts, r…
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