IMF Projects Three Iran War Economic Scenarios: Difficult, Adverse, Severe

Oil, gas, diesel, jet fuel, fertilizer, aluminum, and helium prices have all risen sharply as the war in the Middle East disrupted the promising growth, the IMF stated. Make us preferred on Google Share Facebook X (Twitter) LinkedIn Bluesky Email Copy Copied IMF Communications Officer José Luis de Haro, Research Department Director Pierre-Olivier Gourinchas, Deputy Director Petya Koeva Brooks, and Research Department Division Chief Deniz Igan brief the press on the April 2026 World Economic Outlook during the 2026 Spring Meetings of the IMF and the World Bank Group in Washington, DC, April 14, 2026. (Photo by courtesy of IMF Photo / Jabin Botsford) Content Share Facebook X (Twitter) LinkedIn Bluesky Email Copy Copied Flip Make us preferred on Google The global economy is facing “another difficult test” because of the fuel price shock from the war in the Middle East – the latter made global 2026 real GDP growth decrease to 3.1%, and dropped headline inflation to 4.4% in 2026. The International Monetary Fund (IMF) published the figures in its April 2026 World Economic Outlook – its key report outlining economic forecasts for the global and local economies. Follow our coverage of the war on the @Kyivpost_official . This time, the IMF made three forecasts depending on how the war in Iran goes: the reference forecast, assuming a short-lived conflict with a roughly 19% rise in energy prices, and two forecasts if the war becomes more sustainable and worse, the adverse scenario and severe scenario. The 2026 global GDP growth in the adverse scenario, a prolonged disruption, is estimated to be at 2.5% real GDP, and 2% in the severe scenario (a conflict extending into 2027). Inflation will rise further if the war in the Middle East worsens, reaching 5.4% in the adverse scenario and 5.8% in the severe scenario. Forecast for inflation and growth in the International Monetary Fund’s 2026 April World Economic Outlook. Source: The IMF WEO 2026 dataset. IMF Chief Economist Pierre-Olivier Gourinchas said that this fuel price shock is different to the energy crisis in the 1970s and 2022: economies became less dependent on oil due to a higher share of renewables, and the central banks now are “reining in inflation” rather than supporting economic activity. Other Topics of Interest UN Warns Hormuz Blockade Could Trigger Global Food Crisis The UN says a prolonged disruption in the Strait of Hormuz could drive food inflation and shortages, risking a crisis similar to the aftermath of the COVID-19 pandemic. “There are many other sources of energy, renewables, nuclear and other things, and also the global economy has become much more efficient in terms of how much it needs oil to produce GDP. … Central banks… have learned. They’ve built frameworks. They’ve become more independent. They’ve adopted frameworks that allow them to focus on price stability,” Gourinchas said during the briefing at the IMF on Tuesday. Gourinchas said the reference forecast assumes oil averaging around $80 for the year, but with prices near $100, the world is drifting between the reference and adverse scenarios. Low-income energy importers and Gulf states face the greatest exposure. Central banks can afford to “wait and watch” for now, provided inflation expectations remain anchored, Gourinchas indicated, but must be ready to act if pressures broaden. National governments face limited fiscal room to respond. Broad-based subsidies – widely used during previous energy shocks – are costly and difficult to reverse. Instead, the IMF recommends targeted, temporary support for vulnerable households and businesses. With oil prices hovering closer to $100 rather than the roughly $80 assumed in the IMF’s baseline, the global economy is already drifting between the reference and adverse scenarios, Gourinchas said. Still, the key risk remains that a relative price shock could evolve into sustained, broad-based inflation – a dynamic policymakers would like to avoid. Olena Hrazhdan is the Business Reporter at Kyiv Post, covering Ukraine’s markets, business, and economic policy. While she reports broadly on economic issues, her core focus is banking, finance, monetary and fiscal policy. Olena previously wrote for leading Ukrainian business media and became a Fellow of the International Monetary Fund’s Journalism Fellowship in 2024.