IMF expects world economy to grow a sluggish 3% this year, weighed down by Iran war but helped by AI
Summary
The International Monetary Fund (IMF) lowered its forecast for global economic growth in 2026 to 3%, partly due to higher energy prices caused by the Iran war. However, growth is supported by strong investments in artificial intelligence (AI) and technology, with some countries like the United States benefiting despite challenges.Key Facts
- The IMF expects the world economy to grow 3% in 2026, down from 3.5% in 2025 and 3.1% predicted earlier this year.
- The Iran war caused the closure of the Strait of Hormuz, which handles 20% of the world’s oil and gas, leading to a 32% rise in oil prices.
- Higher energy costs pushed global inflation to 4.7% in 2026, up from 4.1% in 2025, slowing progress against inflation.
- The U.S. economy is expected to grow 2.3% in 2026, helped by tax cuts, productivity gains, and a strong stock market.
- European countries using the euro face low growth, forecast at just 0.9% in 2026, down from 1.4% in 2025, due to higher energy prices.
- China’s growth is predicted at 4.6%, slower than in previous years, affected by energy costs and troubles in its property sector.
- India is forecast to have the fastest growth among major economies at 6.4%, led by strong consumer spending.
- The IMF is an international organization with 191 member countries that promotes economic stability and poverty reduction.
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