Macro: shadow of war
- IMF-related coverage says the global economy is operating 'in the shadow of war', lowering previous growth outlooks. - IMF staff estimated growth would have been about 3.4% absent the February strikes on Iran. - Gita Gopinath warned a '3 Fs' shock—fuel, food and fertiliser—could amplify household stress if oil prices remain elevated ( ).
The International Monetary Fund says the world economy is now growing under the shadow of war, after the Middle East conflict knocked down its 2026 outlook. (imf.org) In its April 14 World Economic Outlook, the fund cut projected global growth for 2026 to 3.1% from the 3.3% it forecast in January, and left 2027 at 3.2%. It also raised its 2026 global inflation forecast to 4.4%. (imf.org) International Monetary Fund staff said 2026 growth would have been revised up to 3.4% without the war that began at the end of February. Instead, the report says higher energy costs, disrupted shipping and air traffic, and weaker market sentiment are dragging on output. (imf.org) The fund’s baseline assumes the fighting is short-lived and energy prices rise a moderate 19% this year. In a more severe case, the International Monetary Fund says global growth could slow to 2.0% in both 2026 and 2027. (pbs.org) Pierre-Olivier Gourinchas, the fund’s chief economist, said the conflict halted momentum that had survived last year’s trade disruptions and policy uncertainty. His April 14 blog said governments now need to manage inflation risks, defense spending pressures and weaker medium-term growth at the same time. (imf.org) The mechanism is straightforward: oil gets more expensive, transport and factory costs rise, and food prices often follow. The International Monetary Fund’s chapter says commodity-importing emerging economies are especially exposed because weaker currencies can make fuel and food imports even costlier. (imf.org) Gita Gopinath, the former International Monetary Fund deputy managing director and now a Harvard professor, said that chain reaction could hit households through “fuel, food, and fertilizer.” In an April 22 interview with India Today TV, she said a prolonged conflict could create both price shocks and physical supply shortages. (businesstoday.in) Gopinath said global growth would be about 0.3 percentage point lower if tensions ease within about a week, but could fall to 2.5% if oil rises to about $100 a barrel, compared with 3.4% without the conflict. She also said India’s near-term hit is partly offset by lower U.S. tariffs, leaving its growth near 6.5% this fiscal year. (businesstoday.in) The International Monetary Fund says poorer energy-importing countries have the least room to cushion the blow with subsidies, tax cuts or extra spending. That leaves the global outlook hinging less on a forecast model than on whether the war, and the oil shock tied to it, actually fade. (pbs.org)
