Overview
- The IMF, in Tuesday’s World Economic Outlook, lowered expected 2026 global growth to 3.1% and raised its inflation forecast to 4.4% because the Iran war has disrupted Gulf energy flows.
- The fund warned that a longer shutdown of the Strait of Hormuz, a route for about one‑fifth of seaborne oil, could drag growth to roughly 2.0% with inflation topping 6% in a severe case.
- Oil has climbed back above $100 after US–Iran talks in Islamabad failed and President Trump announced a naval blockade of Iranian shipping, leading traders to price a higher chance of rate increases.
- The hit will be uneven as energy importers and lower‑income countries face the worst strain, with the IMF projecting contractions for several Gulf economies in 2026 and a sharp downgrade for Iran.
- Households and firms are already feeling it, with US March inflation driven mostly by a spike in gasoline and Australian surveys showing one of the steepest drops in business and consumer confidence in years.