IMF expects world economy to grow a sluggish 3% this year, weighed down by Iran war but helped by AI

The IMF expects the world economy to grow at a sluggish pace, forecasting 3% expansion in 2026 as the fallout from the Iran war weighs on energy markets. The downgrade follows an “energy shock” after Iran shut down the Strait of Hormuz on Feb. 28, a route carrying about one-fifth of global crude oil and natural gas. The Fund projects oil prices to rise nearly 32% this year, while global consumer prices increase 4.7% in 2026, up from 4.1% in 2025, stalling two years of inflation progress. It also credits booming AI and technology investment for partially offsetting damage. The U.S. is forecast to grow 2.3% in 2026, the euro area 0.9%, China 4.6%, and India 6.4%.