Macro: 3‑Fs Risk Alert

The International Monetary Fund cut its 2026 global growth forecast after the Middle East war upended its outlook and pushed inflation risks back up. (imf.org) In its April 14 World Economic Outlook, the IMF said global growth is now projected at 3.1% in 2026 and 3.2% in 2027. It also said global headline inflation is expected to rise to 4.4% in 2026 before easing to 3.7% in 2027. (imf.org) The fund said the 2026 growth forecast was cut by 0.2 percentage point from its January update, and that it is using a “reference forecast” instead of a traditional baseline because the conflict remains fluid. That forecast assumes the war stays limited and disruptions fade by mid-2026. (imf.org) The risk economists are watching is a “3 Fs” squeeze: food, fuel and fertiliser. Those three costs move quickly from commodity markets into grocery bills, transport costs and farm input prices. (businesstoday.in) Gita Gopinath, the former IMF deputy managing director and now a Harvard professor, said on April 22 that a prolonged Iran conflict could expose Indian households to that three-part shock. She said the immediate hit could stay limited if tensions ease quickly, but a longer disruption would be more damaging. (businesstoday.in) The transmission channel starts with energy. The UK Parliament’s House of Commons Library said the conflict disrupted oil and gas flows in the Middle East, pushed petrol prices higher and made later household gas bill increases in 2026 more likely. (commonslibrary.parliament.uk) That briefing said around 20 million barrels a day of oil were affected by the drop in shipping through the Strait of Hormuz, and Gulf oil production was cut by at least 10 million barrels a day in mid-March. Brent crude rose from about $70 a barrel before the conflict to temporary peaks above $100. (commonslibrary.parliament.uk) Fertiliser is part of the same chain because the Persian Gulf is a major production and export hub. The Commons Library said higher fertiliser prices are raising agricultural costs and could threaten future crop yields, which is how an energy shock can become a food shock. (commonslibrary.parliament.uk) The IMF said the pain will not be evenly spread. Its April outlook says the slowdown and inflation pickup are expected to be more pronounced in emerging market and developing economies, especially commodity-importing countries with existing vulnerabilities. (imf.org; imf.org) For consumer marketplaces, that points to a familiar pattern: essentials hold up better than discretionary spending when fuel and food take a bigger share of paychecks. It also points to higher delivery, packaging and seller operating costs when transport fuel and farm-linked inputs get more expensive. (imf.org; commonslibrary.parliament.uk) The IMF’s central case still assumes the conflict cools and disruptions fade by mid-2026. Its warning is that if the war lasts longer or spreads, the downside scenarios become more likely. (imf.org)