The International Monetary Fund has trimmed its 2026 global growth forecast to 3.1%, a 0.2 percentage-point downgrade from its January projection, warning that a prolonged war involving Iran could push the world economy close to recession.
Releasing the latest World Economic Outlook at the IMF-World Bank Spring Meetings, the Fund said the reference forecast assumes the Middle East conflict remains “relatively short-lived.” “Once again, the global economy is being threatened with being thrown off course – this time by the outbreak of war in the Middle East,” the report said.
IMF Economic Counsellor Pierre-Olivier Gourinchas said the global outlook had “abruptly darkened” following the outbreak of war, warning that continued fighting could trigger an “energy crisis on an unprecedented scale.”
In a severe scenario in which oil and natural gas prices rise 100–200% relative to January levels and remain elevated into 2027, global growth could slow to 2% this year, the Fund said — “a close call for a global recession.” Growth below 2% has been breached only four times since 1980.
Prior to the conflict, the IMF said, the global economy had been performing better than expected and was “on track for an upgrade.” Part of the January-to-April downgrade was offset by lower US tariff rates compared with last year.
The warning has direct implications for Sri Lanka, whose fuel import bill has ballooned under Hormuz-driven shipping premiums and whose 5th and 6th IMF programme reviews are being negotiated during the current Spring Meetings. Fitch Ratings, in a parallel statement on Monday, said the war had raised its 2026 baseline oil and European gas price assumptions and that “prolonged energy supply and price disruptions could pose downside risks” to Sri Lanka’s ‘CCC+’ sovereign rating. Earlier adverse-scenario projections had flagged a 2.5% growth path; the new WEO confirms the downgrade.
