IMF to Downgrade Global Economic Growth Projections as U.S.-Iran Conflict Lingers

The International Monetary Fund (IMF) says it will downgrade global growth projections as escalating tensions between the United States and Iran continue to disrupt economic activity and delay a return to pre-war price levels.

IMF Managing Director Kristalina Georgieva said the conflict is creating “asymmetric shocks” across economies, warning that prices will not quickly return to pre-war levels.

“We are going to have a downgrade, and the size of this downgrade will depend on duration and speed with which everything can come back to the same level of production,” she explained.

She noted that even if a ceasefire holds, recovery will be uneven, with some regions stabilising faster than others, prolonging inflationary pressures and complicating central bank responses.

Concerns deepened after President Donald Trump announced a full naval blockade of the Strait of Hormuz, a critical oil shipping route, raising fears of fresh supply disruptions and volatility in global markets.

Trump said the blockade was necessary after talks with Iran in Pakistan failed, citing Tehran’s refusal to abandon its nuclear ambitions.

“Effective immediately, the United States Navy… will begin the process of blockading any and all ships trying to enter or leave the Strait of Hormuz,” he declared.

The move has cast doubt on the sustainability of last week’s ceasefire and dimmed hopes for a lasting resolution, with analysts warning of further energy price spikes.

Earlier, the World Bank cut its 2026 growth forecast for Sub-Saharan Africa by 0.3 percentage points to 4.1%, citing rising fuel and fertilizer costs and heavy debt burdens linked to the Iran war.

Global policymakers now fear the conflict could derail fragile recovery efforts, particularly in emerging markets already struggling with high costs and supply chain disruptions.