Map Shows Countries Taking Biggest Hit from Iran War
On Tuesday, the International Monetary Fund (IMF) released its latest World Economic Outlook update, warning that the conflict in Iran had “halted” the global economic momentum enjoyed early in the year.
The organization had previously expected the global economy to grow by 3.4 percent in 2026, but has now lowered this to a baseline forecast of 3.1 percent. In a “severe scenario,” it said, energy supply disruptions extending into next year would slash global growth to only 2 percent, with worldwide inflation rising to 6 percent.
“War in the Middle East has halted the positive global momentum,” IMF chief economist Pierre-Olivier Gourinchas said on Tuesday, adding that the “shock” would feed into higher commodity prices, rising inflation expectations, and a “tightening of financial conditions that dampens demand.”
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How the Iran war is impacting global economic growth
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Why It Matters
As the IMF notes, supply disruptions sparked by the war-caused largely by the blockade on the Strait of Hormuz and regional infrastructure damage-have driven oil prices to multiyear highs and accelerated inflation across the globe.
In the U.S.-where one of the most observable impacts has been soaring gas prices-economists have warned that the war materially increases the chance of the country sliding into a recession, but other nations remain even more exposed to the conflict's economic fallout.
What To Know
“After withstanding higher trade barriers and elevated uncertainty last year, global activity now faces a major test from the outbreak of war in the Middle East,” the IMF wrote in its analysis.
As a result, the organization has revised growth projections for multiple countries compared with its prewar outlook from January, with most of those included in its analysis seeing a downgrade but others now looking at brighter economic prospects.
Following 2.1 percent growth in real gross domestic product (GDP) in 2025, the IMF forecasts that the U.S. economy will grow by 2.3 percent this year, down 0.1 percent from its January outlook. However, forecasts for 2.1 percent growth in 2027 mark a slight improvement compared to the last report.
Among nations in the G7, the United Kingdom was subject to the harshest revision-its growth forecast slashed 0.5 percentage points to 0.8 percent for 2026, and by 0.2 points to 1.3 percent or 2027.
For all countries included in the IMF's analysis, Saudi Arabia has seen the largest downgrade to its 2026 forecast-cut 1.4 percent to 3.1 percent, in line with the worldwide average. However, a rebound is expected, and its 2027 forecast of 4.5 percent marks a 0.9 percent improvement from the January outlook.
China is expected to take a 0.1 percent hit to economic growth this year, as is Canada, though Brazil and Russia have seen their prospects improve 0.3 percent since January.
What Happens Next
In addition to the war, the IMF highlighted several other potential headwinds that could complicate the world economy's prospects, but noted that “downside risks dominate the outlook.”
“A longer or broader conflict, worsening geopolitical fragmentation, a reassessment of expectations surrounding artificial‑intelligence‑driven productivity, or renewed trade tensions could significantly weaken growth and destabilize financial markets,” it said on Tuesday. “Elevated public debt and eroding institutional credibility further heighten vulnerabilities.”
“At the same time, activity could be lifted if productivity gains from AI materialize more rapidly or trade tensions ease on a sustained basis,” it added.
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This story was originally published April 16, 2026 at 5:23 AM.