The International Monetary Fund has updated its global economic projections, projecting a sharp slowdown resulting from the impact of the Iran war. The organization cited an energy shock caused by the conflict as the primary driver for a modest downgrade in the world economy's outlook.
The IMF reduced its original growth forecast for this year from 3.1 percent, as announced in April, to 3 percent. Expectations for 2026 have also been lowered to 3 percent, down from a previous projection of 3.5 percent.
However, the IMF noted that the boom in artificial intelligence has helped offset the fallout from the conflict in the Middle East. This demand for AI continues to partly mitigate the energy shock from the Iran war, leaving the growth forecast for this year largely unchanged.