IMF Cuts 2026 Global Growth to 3% and Lifts Inflation Forecast to 4.7%

The International Monetary Fund (IMF) lowered its estimate for world economic growth in 2026 to 3.0%, down from the 3.1% it projected in April and the 3.3% it saw in January. The fund expects a rebound to 3.4% in 2027, but the near-term revision reflects the impact of the Middle East conflict and higher energy costs.

The downgrade is modest in size, one-tenth of a percentage point, yet the accompanying assumptions matter more than the headline number. The IMF now expects headline inflation of 4.7% this year, a rise of 0.3 points from April, and its baseline holds energy prices about 25% above where they stood before fighting began in late February.

Crucially, the fund built its forecast on the expectation that the Strait of Hormuz would begin reopening in mid-July and return to prewar conditions by March 2027. The renewed United States and Iranian strikes overnight make that timeline unlikely, which means the published numbers already look optimistic relative to the morning's events.