IMF cuts 2026 global growth forecast to 3.0 percent

The International Monetary Fund lowered its global growth forecast for 2026 on Wednesday, citing the ongoing economic fallout from the war in the Middle East, which has been only partially offset by a boom in artificial intelligence. The IMF now projects the world economy will expand by 3.0 percent this year, a slight downgrade from its 3.1 percent forecast in April and a cooling from the 2025 growth rate.

This marks the second time this year the fund has reduced its overall growth expectations. The updated forecast, part of its July World Economic Outlook, was prepared before renewed hostilities erupted between the United States and Iran in recent hours. Officials said the developments underscore the uncertainty and risks surrounding the economic outlook.

Global inflation is now anticipated to accelerate to 4.7 percent in 2026, a higher level than previously projected. However, IMF officials described the higher inflation as a pause rather than a break from the longer-term disinflation trend.

The modest slowdown reflects a clash of two major forces: a negative supply shock from the Middle East conflict and a positive technology shock driven by advances in AI. The war, which...