The International Monetary Fund just took a red pen to its global economic outlook, and the revisions are not pretty. The fund now expects global GDP to grow just 3.1% in 2026, down from the 3.3% it projected in January and the 3.4% estimate that existed before the Iran conflict kicked off.
For context, global growth hit 3.4% in 2025.
What’s driving the downgrade
The escalating conflict in the Middle East involving Iran, the US, and Israel, which began on February 28, 2026, has thrown a wrench into one of the world’s most critical energy chokepoints.
The Strait of Hormuz, through which a massive share of global oil supply flows, is experiencing significant disruptions. The IMF projects energy commodity prices will climb 19% in 2026, with oil prices specifically jumping 21.4%.
