<div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>The </span><a href="http://9news.com.au/israel-iran-conflict" rel="" target="" title="Iran war"><span>Iran war</span></a><span> has stalled the world's </span><a href="http://9news.com.au/economy" rel="" target="" title="economic"><span>economic</span></a><span> momentum this year, likely pushing growth lower compared to 2025, the International Monetary Fund has warned.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>The IMF on Tuesday downgraded its forecast for global growth to 3.1 per cent in 2026 from the 3.3 per cent it had forecast back in January. The expected growth would mark a deceleration from a 3.4 per cent expansion in 2025.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><a href="http://9news.com.au/usa" rel="" target="" title="US"><span>US</span></a><span> and </span><a href="http://9news.com.au/israel" rel="" target="" title="Israeli"><span>Israeli</span></a><span> strikes on </span><a href="http://9news.com.au/iran" rel="" target="" title="Iran"><span>Iran</span></a><span> — and Tehran's closing of the Strait of Hormuz and retaliatory strikes on </span><a href="http://9news.com.au/oil" rel="" target="" title="oil"><span>oil</span></a><span> refineries and other energy infrastructure in neighbouring countries — have driven oil and gas prices sharply higher around the world.</span></div></div><div><div id="adspot-mobile-medium"></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>As a result, the IMF marked up its expectation for global inflation this year to 4.4 per cent from 4.1 per cent in 2025 and from the 3.8 per cent it had forecast for this year in January.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Until the war, the world economy had shown surprising resilience in the face of US President Donald Trump's protectionist policies, which built a wall of import taxes around the United States, the world's biggest economy and once a market practically wide open to imports.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>The damage was less than feared partly because Trump's tariffs last year ended up being lower than what he'd originally announced.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>A tech boom, marked by massive investment in data centres and artificial intelligence, and rising productivity also combined to strengthen the world economy.</span></div></div><div><div class="OUTBRAIN" data-reactroot="" data-src="//www.9news.com.au/world/us-israel-iran-war-update-imf-cuts-the-outlook-for-global-growth-expects-higher-inflation-citing-war-fallout/282a3bf5-6af9-4b7d-bf52-84870e56f76e" data-widget-id="AR_5"></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"War in the Middle East has halted this momentum,'' IMF chief economist Pierre-Olivier Gourinchas wrote in a blog post accompanying the fund's latest World Economic Outlook.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>The IMF's forecast assumes that conflict in the Persian Gulf is short-lived and that energy prices rise "a moderate 19 per cent'' this year.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Things could be much worse. In a "severe scenario'' in which the energy shocks spill into next year and central banks are forced to raise interest rates to combat inflation, global growth could drop to 2 per cent in 2026 and 2027.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"Despite the recent news of a temporary ceasefire, some damage is already done, and the downside risks remain elevated," Gourinchas wrote.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Australia's economy is expected to grow 2.0 per cent this year, close to the highest among wealthy western countries, but it's predicted inflation rate of 4.0 per cent is also among the highest. </span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>The fund slightly downgraded its forecast for US growth this year to 2.3 per cent. The 21 European countries that share the euro currency, hard hit by soaring natural gas prices, will collectively grow 1.1 per cent this year, down from 1.4 per cent in 2025, the IMF forecast.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Hardest hit are likely to be deeply indebted poorer countries that import energy and can't afford to buffer their economies with stepped-up government spending and tax relief. The IMF sharply lowered the outlook for sub-Saharan Africa, for instance, to 4.3 per cent this year from the 4.6 per cent it had expected in January.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>One winner that's emerging from the conflict is Russia, an energy exporter that stands to benefit from higher prices. The IMF upgraded its forecast for the Russian economy, hard hit by sanctions following the invasion of Ukraine in 2022, to a still-modest 1.1 per cent.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Meanwhile, the governor of the National Bank of Ukraine has tried to keep Russia's war in his country at the centre of talks among global economic leaders. But in a Monday interview with reporters, Andriy Pyshnyy noted how higher oil prices due the war in Iran are hurting his country.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>He said through a translator that annual inflation in March hit 7.9 per cent in Ukraine, well above the forecast of 7 per cent in large part because of higher fuel costs. He estimated that fuel prices could push up annual inflation by 1.5 percentage points to 2.8 percentage points.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Pyshnyy noted that there could also be higher fertiliser and production costs in an economy that is seeking stable prices as part of the ongoing war with Russia, which attacks Ukraine by air on average every three to four minutes.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"We are trying to walk on a razor blade," he said of a mission complicated by external factors.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>The IMF is a 191-nation lending organisation that works to promote economic growth and financial stability and to reduce global poverty.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><em><strong><span>NEVER MISS A STORY: </span></strong></em><em><span>Get your breaking news and exclusive stories first by following us across all platforms.</span></em></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><ul><li><em><strong><span>Download the 9NEWS App here via </span></strong></em><a href="https://apps.apple.com/au/app/9news/id1010533727" rel="" target="" title=""><em><strong><span>Apple</span></strong></em></a><em><strong><span> and </span></strong></em><a href="https://play.google.com/store/apps/details?id=nineNewsAlerts.nine.com&amp;hl=en_AU&amp;pli=1" rel="" target="" title=""><em><strong><span>Google Play</span></strong></em></a><em></em></li><li><em><strong><span>Make 9News your preferred source on Google by </span></strong></em><a href="https://9.nine.com.au/8x987w" rel="" target="" title=""><em><strong><span>ticking this box here</span></strong></em></a><em></em></li><li><em><strong><span>Sign up to </span></strong></em><a href="https://login.nine.com.au/edm?client_id=nineatnine" rel="" target="" title=""><em><strong><span>our breaking newsletter here</span></strong></em></a><em></em></li></ul></div></div>