The International Monetary Fund revised its estimate for 2026 global growth lower in its World Economic Outlook update released on Tuesday, with most regions seeing downward adjustments that are directly related to the conflict in Iran.
World output is now expected to rise by 3.1% in 2026 after a 3.4% gain in 2025, a downward adjustment from a 3.3% gain for 2026 in the January version of the WEO. Growth is expected to accelerate modestly to an unrevised 3.2% in 2027.
"Absent the war, global growth would have been revised upward," the IMF said. "Indeed, forecasts based on pre-conflict assumptions would have shown a slight upward revision of 2026 growth relative to the January WEO Update, by 0.1 percentage point, to 3.4%. Hence, the downward revision for 2026 largely reflects the disruptions from the conflict in the Middle East, partly offset by carryover from recent strong data and reduced tariff rates."
The IMF added that the situation could worsen if the conflict has a larger than expected impacted.
"Under an adverse scenario with larger and more persistent increases in energy prices, global growth would slow further to 2.5% in 2026 and inflation would reach 5.4%," the IMF said. "Under a more severe scenario in which there is more damage to energy infrastructure in the conflict region, the impact would be even larger: Global growth would be cut to just around 2% in 2026, while headline inflation would be just above 6% by 2027. The impact on emerging market and developing economies would be almost twice that on advanced economies."
For the US, the IMF now sees a 2.3% gain in 2026 after a 2.1% increase in 2025, a downward adjustment from the 2.4% growth estimate for 2026 in January. A slowdown to 2.1% growth is expected for 2027, an upward adjustment from the 2% gain previously estimated.
The Canadian economy is expected to expand by 1.5% in 2026 after a 1.7% gain in 2025, a downward adjustment from a 1.6% gain previously estimated for 2026. Growth is seen accelerating to 1.9% in 2027, unrevised from the January WEO.
Euro area growth is now seen at 1.1% in 2026 after a 1.4% gain in 2025. The new estimate represents a downward revision from a 1.3% gain forecasted in January. Growth is expected to accelerate to 1.2% in 2027, revised down from 1.4% in the January estimate.
UK economic activity is now expected to rise by 0.8% in 2026, revised down sharply from 1.3% in the previous estimate and following a 1.3% increase in 2025. The UK economy is expected to grow by 1.3% in 2027, revised down from a 1.5% gain in the previous estimate.
The Japanese economy is expected to expand by 0.7% in 2026, unrevised from the January estimate and following a 1.2% increase in 2025. The IMF sees Japanese growth slowing to 0.6% in 2027, also unrevised from the previous estimate.