War-led energy crisis could drag global growth to 2%: IMF

15-Apr-2026

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The war in West Asia that erupted at the end of February is now threatening to derail the global economy, with the International Monetary Fund (IMF) warning that disruptions could sharply slow growth if the West Asia conflict intensifies.

In its latest World Economic Outlook, the IMF says the global economy is “threatened with being thrown off course” by the conflict, which is already acting as a “significant counterforce” to recent tailwinds through its impact on commodity markets, inflation expectations and financial conditions.

Under its reference forecast, which assumes the conflict remains limited in duration and scope with disruptions fading by mid-2026, global growth is projected at 3.1% in 2026 and 3.2% in 2027.

In an adverse scenario involving more persistent increases in energy prices, global growth would slow to 2.5% in 2026, while inflation would rise to 5.4%.

The impact is significantly sharper in a more severe case involving damage to energy infrastructure across the Middle East.

The IMF says “global growth would be cut to only about 2% in 2026”, while headline inflation would climb to just above 6by % 2027.

Such an outcome would push the global economy close to recession territory, with weak growth and elevated inflation reinforcing each other.