The IMF projected global growth of 3.1% this year, 0.2 percentage points lower than its January estimate. The downgrade is based on the assumption that the Middle East conflict will be “relatively short-lived.”
However, the IMF also outlined two scenarios if the conflict persists. In a worst-case scenario, where oil and natural gas prices surge by 100–200% from January levels and remain elevated through 2027, global growth could slow to just 2%, bringing the world economy close to recession. (A global recession is defined as growth below 2%, a scenario seen only four times since 1980.)
The IMF noted that, prior to the conflict, the global economy had been performing better than expected, with relatively strong growth prospects for this year. The conflict is now disrupting those projections. According to IMF Chief Economist Pierre-Olivier Gourinchas, the situation could trigger an unprecedented global energy crisis.
