Iran War Will Hit Global Growth Hard: IMF

Why It Matters

A slide to 2% growth would signal a deep global slowdown, forcing central banks and governments to choose between battling inflation or supporting growth, while raising the likelihood of financial stress in vulnerable economies. The outlook elevates the risk of broader spillovers from energy markets and underscores the economic cost of prolonged geopolitical conflict.

Summary

The IMF told the World Bank meetings that its baseline assumes a swift resolution to the Iran war and forecasts global growth of 3.1% this year, a 0.3 percentage-point downgrade since mid-February. It warned, however, that more severe scenarios with sustained energy-price shocks could cut growth to just 2%—a level seen only during major crises like the 2008 financial crash and the COVID downturn. The fund highlighted wide divergences across countries, with commodity-importing emerging markets and already-fragile developing economies at greatest risk. Policymakers face heightened uncertainty in calibrating monetary and fiscal support as geopolitical shocks threaten both growth and inflation dynamics.

Original Description

IMF Chief Economist Pierre-Olivier Gourinchas says Iran war is weighing on global growth outlook, speaking to CNBC’s Karen Tso.

📺️Watch more: cnb.cx/4chu6ck