The International Monetary Fund has cut its global economic growth forecast to 3.1% for the current year, down from 3.3% in its previous estimates. The Fund warned that the continuation of the war in the Middle East could push the global economy towards a sharp slowdown, and even into a recession, if the conflict drags on and energy infrastructure suffers extensive damage. In its World Economic Outlook report, the Fund explained that the revision was due to a major shock in oil markets following the outbreak of war in the region, which led to supply disruptions and a sharp spike in energy prices. The baseline scenario assumes a limited duration of the war's impact and a moderate rise in energy prices. However, uncertainty remains high. In the most pessimistic scenario, the Fund warned that the global economy could approach a recession (growth of less than 2%), especially if oil supplies remain disrupted and prices hit record levels, leading to broad-based inflationary pressures. The Fund also lowered its growth forecast for emerging economies to 3.9%, down from 4.2% previously, noting that these countries will be the most affected by energy and food price shocks, while advanced economies will be relatively less impacted as some are energy exporters. Regarding inflation, the Fund projects global inflation to rise to 4.4% this year, compared to 4.1% last year, expecting that the impact of higher energy and food prices will continue to curb the disinflationary trend of recent years. In the central scenario, global growth could slow to 2.5% with inflation rising to 5.4%, while in the worst-case scenario, with oil at $110 per barrel, growth could fall below 2% and inflation could reach 5.8% in 2026 and 6.1% the following year. As for major economies, the Fund cut its growth forecast for the U.S. economy to 2.3%, while growth in Europe is expected to slow significantly, with Germany and the UK growing by no more than 0.8%.
