IMF Forecasts Global Growth Risks From Middle East Conflict
The IMF issued three global growth outlooks today based on the Middle East conflict. A severe scenario projects growth falling to 2 percent as oil prices rise.
The International Monetary Fund has released three potential trajectories for the global economy through 2027, highlighting the massive uncertainty stemming from conflict in the Middle East. The main reference forecast assumes a short-lived conflict with energy price disruptions fading relatively quickly. Under this reference path, global GDP growth is projected at 3.1% in 2026 and 3.2% in 2027. The average price for Brent Crude Oil is expected to be $82 per barrel in 2026 and $75 in 2027, while headline inflation is forecast at 4.4% and 3.7% respectively. A middle adverse scenario envisions a longer conflict, with global GDP growth slowing to 2.5% in 2026 and 3.0% in 2027. In this outlook, oil prices would average $100 in 2026 before returning to $75 in 2027, with inflation reaching 5.4% and 3.9%. The most severe scenario predicts a significant economic impact, with global growth falling to 2.0% in 2026 and 2.2% in 2027. This path sees oil prices climbing to $110 in 2026 and surging to $125 in 2027, while headline inflation remains high at 5.80% and 6.10%.
