IMF cuts 2026 global growth to 3% as Iran war drives oil shock

The International Monetary Fund trimmed its 2026 world growth forecast to 3% from the 3.1% it projected in April, saying the Iran war and the shutdown of the Strait of Hormuz have pushed up energy costs and slowed activity. The IMF expects global growth to recover to 3.4% in 2027, but warned that progress on inflation has stalled. Its outlook assumes the strait reopens later this month and trade returns to normal by March. The fund projects oil prices will rise nearly 32% this year and global consumer prices will increase 4.7% in 2026, up from 4.1% in 2025. It said stronger AI and technology investment helped cushion the shock, especially in the United States, where it kept its 2026 growth forecast at 2.3%.