In a further downward revision of its forecasts for global economic growth in 2026, compared to its forecasts from last April, due to the impact of the war in Iran, the International Monetary Fund (IMF) announced on Wednesday, now expecting growth of 3.0%, down from the 3.1% it had projected in April 2026.
In contrast, the IMF upgraded its forecast for global economic growth in 2027 to 3.4%, up from the 3.2% it projected last April, while also raising its forecast for global inflation to 4.7% in 2026.
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“The moderate slowdown (in growth) reflects the impact of the war in the Middle East, which was offset, in part, by accelerating momentum driven by demand in the global technology cycle, due to developments in artificial intelligence (AI) and its adoption,” the IMF emphasizes in its July 2026 “World Economic Outlook” (WEO) report.
According to the IMF, the impact varies significantly depending on each country’s exposure to the war and its position in the technology value chain.
Energy-exporting countries outside the conflict zone benefit from favorable trade terms, while economies linked to technology-driven recovery are experiencing stronger activity, even if they are energy importers, he notes.
Conversely, it reports that economic activity is weakening for energy importers with limited participation in the technology value chain—a group that includes many low-income countries, as it notes.
According to the July WEO, the IMF maintained its forecast for U.S. economic growth at 2.3% for 2026 and revised it upward to 2.2% for 2027, compared to its forecast last April.
As for the Eurozone economy, the IMF lowered its growth forecast in the July WEO to 0.9%, down from the 1.1% it had projected in April, and kept its growth forecast for 2027 unchanged at 1.2%.
For Germany, it expects growth of 0.7% in 2026, down from the 0.8% projected in April, and 1% for 2027, down from 1.2% in April. For France, it expects growth of 0.6%, down from the 0.9% it projected in April, while it kept its forecast for 2027 growth at 0.9%.
For China, the IMF now expects growth of 4.6%, up from the 4.4% projected last April, and growth of 4.1% in 2027, up from 4.0%.
It also expects growth of 6.4% for India in 2026, down from the 6.5% it projected in April, and 6.7% in 2027, up from 6.5% in the April forecast.
Inflation at 4.7% in 2026
Furthermore, the IMF reports that global headline inflation is expected to rise from 4.1% in 2025, to 4.7% in 2026 before falling to 3.9% in 2027, with the rise in inflation in 2026 driven by higher energy and food prices.
The slightly upwardly revised inflation forecasts, compared with the April projections, indicate that the downward trend in inflation observed since early 2024 has come to a halt.
“The risks to the outlook are more balanced than in April, but they remain tilted to the downside,” the Fund emphasizes.
Oil at $89
The IMF’s projections assume that the Strait of Hormuz will reopen in mid-July, with conditions generally returning to pre-war levels by March 2027 and severe energy shortages being averted through further reductions in inventories.
The Fund forecasts that energy prices will remain higher than they were before the war, with the average spot price of oil reaching $89 per barrel, 9% higher than the forecast in the April 2026 WEO.
Furthermore, the IMF estimates that natural gas prices (based on Dutch natural gas futures contracts—TTF) will be $15, or 5%, higher than projected last April.
This corresponds to a 32% increase in crude oil prices and a 22% increase in natural gas prices in 2026, compared to 2025, it notes.
It also expects fertilizer prices to rise by 26%.
“Reflecting higher energy and fertilizer costs and more expensive transportation, food prices are expected to rise by 8%,” it emphasizes.
It notes that prices for staple foods in various countries may deviate from the global benchmark.
