By Arlenys Tabare
This Tuesday, officials from the International Monetary Fund and the World Bank gathered in Washington to schedule the first spring meetings, and in this first round they presented their forecasts for global economic growth and the impact the war will have on Iran if it continues this year.
At the meeting, three key points were developed with three possible scenarios: weak, worse and severe, all depending on how the conflict in the Middle East develops in the coming months.
In this sense, IMF officials highlighted in the Report on The World Economic Outlook forecasts GDP growth of 3.1% for this year, representing a 0.2% drop from its January forecast; This is in a “weak” scenario where the average oil price stands at $82 per barrel during 2026.
Now, the IMF warned that, in a more hostile scenario, in which oil prices remain above $100 per barrel this and next year, the global GDP growth forecast would fall to 2.5% in 2026.
However, in a much more severe scenario, where the conflict in the Middle East is prolonged and oil prices are increasingly higher, causing strong consequences in the markets, the global GDP growth forecast would fall to 2.0% for this year.
The second key point of the meeting is a possible global recession amid the enormous uncertainty that the war has generated in the markets, even much greater uncertainty than that caused by President Donald Trump’s tariffs last year.
IMF chief economist Pierre-Olivier Gourinchas stated that what is happening in the Gulf is potentially much more serious. “This would pose an extreme risk of global recession,” he told Reuters.
Gourinchas explained that GDP growth has only fallen to that level four times since 1980 and recalled that the last two recessions developed in the 2009 financial crisis and the 2020 pandemic.
As a third point, IMF officials warned that a prolonged oil price above $100 per barrel in 2026 and 2027 will inevitably drive up overall prices and trigger strong demand for wage increases. In a scenario like this, it would be much more difficult to control inflation; Even better strategies and sacrifices will be required than those made in 2022, noted Gourinchas.
The IMF chief economist expressed that “this change in inflation expectations is going to force central banks to stop and try to reduce it,” he said, but he did not rule out that this temporary increase in prices could also be “ignored” and, depending on inflation expectations, keep interest rates stable.
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