IMF warns of potential global recession if Iran war worsens

STORY: :: The IMF's latest report warns of a potential global recession if the Iran war worsens

:: Washington, D.C. / April 14, 2026

:: Pierre-Olivier Gourinchas, IMF chief economist 

"The closing of the Strait of Hormuz and serious damage to critical energy facilities in the Middle East raised the prospect of a major energy crisis should a durable solution not be found soon.'' //  ''Our report presents three scenarios. Our reference forecast assumes a short lived conflict and a moderate 19% rise in energy prices in 2026. Still, some damage will not be avoided. Global growth falls to 3.1% this year. A downgrade from January forecast and headline inflation rises to 4.4%. Our adverse scenario assumes further disruption leading to higher energy prices and inflation expectations and tighter financial conditions throughout the year. Growth falls to 2.5% this year and inflation rises to 5.4%. Our severe scenario assumes that energy supply disruptions extend into next year, with greater macro instability. Global growth falls to 2% this year and next, while inflation exceeds 6%. Downside risks are clearly very elevated now. The impact of the war will be uneven. Low income energy importers are highly exposed, especially those with preexisting vulnerabilities and limited buffers. But the damage is most severe for countries in the Gulf.''

With massive uncertainty over the Middle East conflict gripping finance officials gathering for IMF and World Bank spring meetings in Washington, the IMF presented three growth scenarios: weaker, worse and severe, depending on how the war unfolds.

The World Economic Outlook's most optimistic "reference scenario" assumes a short-lived Iran war and forecasts 3.1% real GDP growth for 2026, down 0.2 percentage point from its previous forecast in January.

Under this scenario, oil prices average $82 per barrel for all of 2026, a decline from recent levels of around $100 for the Brent benchmark futures price.

Absent the Middle East conflict, the IMF said it would have upgraded its growth outlook by 0.1 percentage point to 3.4%, due to a continued technology investment boom, lower interest rates, less-severe U.S. tariffs and fiscal support in some countries.

But the war has created a far bigger risk to the global economy than President Donald Trump's initial wave of steep tariffs did a year ago, IMF chief economist Pierre-Olivier Gourinchas said.