IMF Projects Global Growth Slump as Middle East Conflict Disrupts Energy Supplies Africa

WASHINGTON, D.C., March 30, 2026 — The International Monetary Fund said the ongoing Middle East conflict is expected to push global prices higher and slow economic growth, warning that disruptions tied to the Gulf region could ripple across economies worldwide throughout 2026. The IMF said the main transmission channels are energy and food, with supply risks for oil, gas, and fertilizer feeding into broader inflation pressures.

The IMF’s assessment said interruptions to flows from the Gulf region could raise costs for households and businesses, weighing on activity during 2026 and potentially leaving longer-lasting scars on the global economy. It highlighted fertilizer as a key vulnerability, noting that about one-third of global fertilizer production transits through the Strait of Hormuz. The IMF said that if disruptions persist, global food prices could rise by an average of 15% to 20% in the first half of 2026.

Energy markets have already moved sharply, according to the IMF’s report. It said natural gas prices in the UK have more than doubled since December, while Brent crude climbed to over $116 per barrel before later stabilizing around $112. The IMF linked these price moves to the broader risk that higher fuel and food costs will erode purchasing power and reduce living standards, as consumers face higher bills for petrol, diesel, and groceries.

The IMF said the effects will not be uniform across countries. It noted that some net oil and gas exporters could benefit from higher fossil fuel prices, but it emphasized that the overall global outcome is expected to be negative as higher input costs spread through supply chains. The IMF said businesses are likely to come under pressure to lift prices, reinforcing inflation at a time when many economies are sensitive to renewed cost shocks.

On policy, the IMF said central banks may be pushed toward interest rate increases to contain inflation if price pressures broaden. It also warned that governments carrying high debt may have less room to cushion households and firms, because access to funding could be constrained when support is most needed. The IMF singled out European countries including Italy and the UK as particularly exposed, citing their reliance on gas-fired power.

While the IMF outlined clear channels from Gulf supply disruptions to higher global prices and weaker growth, it also underscored uncertainty around how sustained the disruptions could be and how far price increases might extend beyond energy and food. The IMF’s message was that the conflict’s economic fallout is not confined to the region, and that the combination of higher inflation and slower growth could test policymakers across advanced and emerging economies in 2026.