"War in the Middle East has halted this momentum," IMF chief economist Pierre-Olivier Gourinchas wrote, after the fund cut its 2026 global growth forecast to 3.1%. It raised its global inflation outlook to 4.4% and warned a prolonged energy shock could shave growth to about 2% in a severe scenario — risks that would ripple through Spain as part of a softer euro-area outlook.

Global downgrade driven by Middle East conflict The IMF’s World Economic Outlook trimmed global growth for 2026 to 3.1% from 3.3% projected in January, saying a period of unexpectedly strong momentum — partly from tech-led investment and rising productivity — has been interrupted by military action involving Iran. The conflict has altered trade and energy flows: U.S. and Israeli strikes on Iran, Tehran’s move to close the Strait of Hormuz and retaliatory attacks on regional energy infrastructure have pushed oil and gas prices higher. The IMF raised its projection for global inflation to 4.4%. “War in the Middle East has halted this momentum,” Pierre-Olivier Gourinchas, IMF chief economist, wrote in a blog post accompanying the outlook. The fund’s baseline assumes a short-lived Persian Gulf conflict with a moderate 19% rise in energy prices this year, and it offered a severe scenario where persistent energy shocks and tighter central-bank policy cut global growth to roughly 2% in 2026 and 2027. Europe’s growth outlook slips The IMF singled out the euro area for its sensitivity to higher gas prices: the 21 countries sharing the euro are forecast to grow 1.1% in 2026, down from 1.4% in 2025. The fund noted the bloc’s exposure stems from reliance on natural gas for industry, power and heating and differing fiscal room across member states to cushion households and firms. The IMF also modestly lowered its U.S. growth projection to 2.3% for the current year, while noting some commodity exporters — including energy exporters like Russia — would see improved outlooks from higher prices. Why Spain matters in the European picture Spain’s economy is embedded in broader European markets and trade routes; disruptions to energy and global demand tend to reverberate across the region. The IMF warned that poorer, heavily indebted energy-importing countries will be among the hardest hit because they may lack fiscal space to cushion domestic demand. Even a moderate European slowdown reduces external demand for goods and tourism, channels important to Spain. Channels of impact on Spain Higher global energy prices and rising inflation affect Spain through several clear channels: - Higher production and transport costs for firms, which can squeeze margins and push up consumer prices. - Squeezed household budgets and eroded real incomes if wages do not keep pace with inflation. - Potential central-bank responses (higher interest rates) that raise borrowing costs for households and businesses. These pressures imply weaker export markets and higher costs for Spanish industry and transport in the near term.

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In a severe scenario the IMF said persistent energy shocks and tighter central-bank policy could cut global growth to roughly 2% in 2026 and 2027.

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