War in Iran Could Plunge World into Recession, IMF Warns
IMF warns that further escalation of the Iran conflict could trigger a global economic downturn, soaring inflation, and market turmoil as it slashes growth forecasts.
Iran war escalation could trigger a global recession, spiralling inflation and a sharp backlash in financial markets, the International Monetary Fund (IMF) has warned. Against an increasingly volatile backdrop, the Washington-based fund said the economic damage from the Middle East conflict was steadily rising as it cut its growth forecasts for 2026 based on the impact from the war so far.
The IMF's stark warning came as it downgraded the UK's economic outlook more sharply than any other G7 nation, predicting the country will face joint-highest inflation in the group this year. In its latest World Economic Outlook report, the fund slashed the UK's growth forecast for 2026 to just 0.8%, the lowest in the G7.
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The global economic fallout from the Iran conflict has become a major focus at the IMF's spring meetings in Washington this week, where policymakers are grappling with the cascading effects of the war. A further escalation in the Middle East could severely disrupt oil and gas supplies, sending energy prices soaring and plunging the world into a deep recession, the IMF warned.
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According to the IMF, the UK is predicted to face joint-highest inflation in the G7 this year at 9.75%, tied with Italy. This reflects the severe economic impact the Iran war is having on the British economy, which is highly dependent on imported energy.
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The IMF's downgrade of the UK's growth forecast reflects the country's high exposure to the economic fallout from the Iran war. With the conflict disrupting global energy markets and driving up inflation, the British economy is expected to fare worse than its G7 peers.
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The IMF warned that a further escalation in the Middle East conflict could have severe global consequences, potentially plunging the world into a deep economic downturn. As policymakers grapple with the cascading effects of the war, the economic damage is expected to continue rising in the coming years.
Source: The Guardian
