IMF keeps 2026 global growth at about 3 percent as the Iran war energy shock lingers

The International Monetary Fund said on Thursday that the world economy is still on track to expand by about 3 percent in 2026, the same figure it published in July, even as the war with Iran keeps oil and gas expensive and public debt near a postwar peak.

Spokesperson Julie Kozack told reporters that six months of fighting have not produced the contraction many desks feared in the spring. She credited spare oil and gas stocks, shifts toward other fuels in some countries, and demand cuts in others. She also said the energy shock is not finished. Prices remain high. Many governments still need to refill inventories. Northern Hemisphere winter will raise the call on those stocks.

The July World Economic Outlook put 2026 growth at 3.0 percent. That was down from an average of 3.5 percent in 2024 and 2025, and a shade below the Fund's April figure of 3.1 percent. Thursday's briefing did not publish a new country table. It confirmed that the staff have not cut the headline again after the latest round of attacks around Hormuz and the Red Sea.

Kozack listed the channels that still threaten that number. The war has widened. Fighting in Yemen intensified this week when Houthi forces took the Red Sea port of Mokha. The United States and Iran have traded strikes on tankers. Brent has traded near or above $100 a barrel. The Fund said the supply shock is already lifting the prices of energy, fertilisers, food and other commodities.

Inflation expectations have risen. Kozack said they remain "well-anchored" over a longer horizon. The disinflation that followed the 2022 cost-of-living spike has stalled. The Fund's advice to central banks was short: stay on price-stability mandates. That line lands days after the European Central Bank raised its deposit rate to 2.5 percent in Berlin and after the 30-year U.S. Treasury yield touched a post-2007 high.

Public debt is the other constraint. Global government debt is near 100 percent of GDP, the highest ratio since the Second World War, and the Fund expects it to rise. Advanced economies carry particularly high ratios. That leaves less room to subsidise fuel or to roll out another round of transfers if oil stays at current levels through the winter.

Kozack said the Fund will look closely at new U.S. sanctions on Iran, including secondary measures that reach firms in third countries. A fuller write-up is due in the next global outlook. The timing matters for India, China, Turkey and others that have kept buying Iranian crude through intermediaries. Secondary sanctions are designed to raise the cost of those trades without a new Security Council resolution. Russia and China hold vetoes on the Council and opposed this week's IAEA board vote to refer Iran.

The Fund's message is narrower than the July chapter. Growth has not broken. The buffers that protected it, stored fuel and demand destruction, are finite. Winter, tanker losses and a wider Red Sea closure would test the 3 percent line. The next published forecast will show whether staff still believe the line holds after those tests are counted.

For finance ministries the practical takeaway is the debt ratio. A world that absorbed a Hormuz shock with 3 percent growth did so by running fiscal accounts that the Fund now calls the most loaded since 1945. That is the limit on the next subsidy, and on how long governments can keep households away from a $100 barrel.