On April 14, the International Monetary Fund (IMF) released its World Economic Outlook, cutting its 2026 global growth forecast by 0.2 percentage points to 3.1%. The report cited energy shocks and uncertainty from the Middle East conflict as the main downward drivers, though strong economic data and tariff reductions partially offset the impact.

The Middle East conflict has caused Iran over $270 billion in economic losses, with shipping disruptions in the Strait of Hormuz disrupting global energy supply chains. The IMF’s Global Financial Stability Report warned that while the global financial system has weathered the shock for now, vulnerabilities could amplify risks. Elevated energy prices have pushed inflation higher in many countries, forcing central banks to maintain high interest rates.

Economic performance diverged across regions. The US showed resilience, but high rates pressured housing and manufacturing. The Euro area was hit hard by energy shocks, with Germany planning €1.6 billion in energy tax cuts to boost growth. Emerging markets and developing economies faced capital outflows and currency depreciation, with many intervening in forex markets to stabilize exchange rates.

The report called for stronger international cooperation to de-escalate geopolitical conflicts and secure energy and food security. It also recommended countries optimize fiscal policies, support vulnerable sectors, and prevent financial risk spillovers. Markets are monitoring policy signals from the upcoming IMF-World Bank Spring Meetings and the Middle East situation’s ongoing impact.