IMF says Iran war "halted" global economic momentum, expects hotter inflation

The International Monetary Fund (IMF) announced on Tuesday that the Iran war has halted global economic momentum, leading to new projections for slower growth and higher inflation. The IMF cut its global growth forecast by 0.2 percentage point to 3.1% for 2026 and sharply raised its global prices outlook, projecting inflation will rise to 4.4% this year. This makes the IMF the latest major economic institution to warn about stagflation-like global economic fallout from the war. IMF chief economist Pierre-Olivier Gourinchas noted that the closing of the Strait of Hormuz and damage to critical facilities raise the prospect of a major energy crisis if hostilities continue. President Trump imposed a naval blockade on Iran and the Strait of Hormuz on Monday after peace talks failed, further impacting global energy and supply chains.