IMF Warns Global Recession Risk If Iran War Continues
The global economy is at risk of recession. That is the warning from the International Monetary Fund (IMF). The threat comes if the US-Israel war with Iran continues. High energy prices would also persist.
A Stark Warning from the IMF
In its World Economic Outlook report, the IMF described a worst-case scenario. Oil, gas, and food prices spike and stay high this year and next. Global growth could then fall below 2% in 2026.
A Close Call
“This would mean a close call for a global recession,” the IMF said. That has happened only four times since 1980. The most recent was during the Covid pandemic.Energy prices have soared since the war began. The conflict started more than six weeks ago. The key Strait of Hormuz shipping route is effectively closed. Peace talks between the US and Iran have also failed.
Severe Conditions Ahead
The IMF said the global economy is “threatened with being thrown off course”. The trigger was the outbreak of war in the Middle East at the end of February 2026.The most severe conditions would include oil prices averaging $110 per barrel this year. Prices could hit $125 in 2027. Inflation could reach 6% next year. Central banks might then raise interest rates.
IMF chief economist Pierre-Olivier Gourinchas spoke to the BBC. He said a prolonged conflict would cause spiralling inflation, higher unemployment, and food insecurity in some countries.
