The consequences of the war in Iran are already being felt in our pockets and we are approaching an even worse scenario if the conflict is not stopped. The International Monetary Fund (IMF) predicts that an escalation of the war between the United States, Israel and Iran could push the world towards a recession, with skyrocketing inflation and strong turbulence in the markets.
This is stated in its latest economic outlook report. The agency warns that global growth could fall below 2% in 2026 in the worst-case scenario, a threshold that economists consider equivalent to a global recession. It would be the fifth time since 1980 that that level has been reached.
The IMF’s chief economist, Pierre-Olivier Gourinchas, has warned that, even if there are temporary respites, “the damage has already been done” and downside risks remain high.
The possible closure of the Strait of Hormuz, key to global oil transportation, and damage to energy infrastructure could trigger a major crisis. In fact, oil prices have returned to close to $100 per barrel, dragging other products such as diesel, jet fuel, fertilizers and industrial materials such as aluminum up.
Three scenarios
The IMF proposes three scenarios. In the most moderate, the impact of the war would fade by mid-2026, with global growth of 3.1% and inflation of 4.4%. However, if the conflict continues and energy prices remain high, growth could fall to 2.5% and inflation climb to 5.4%.
The most serious scenario depicts a prolonged war, with oil above $110 until 2027. In that case, global growth would collapse to around 2%, while inflation would exceed 6%, forcing central banks to further tighten their monetary policy with interest rate increases.
Given this scenario, the international organization insists that the priority must be to end the conflict to avoid further economic deterioration. In addition, it recommends that governments apply “temporary and focused” support measures, avoiding generalized policies such as subsidies or price controls, which it considers costly and inefficient in a context of high public debt.
Spain, engine of the eurozone
According to experts, the Spanish economy continues to be the engine of the eurozone with growth of 2.8%, 0.2% less than anticipated in January, but well above the figures for Germany, France, Great Britain and Italy.
Spain has a greater capacity to absorb the impact of the energy ‘shock’ derived from the war against Iran thanks to its investment in renewable energies and despite the fact that it will experience greater inflationary pressure this year, the deputy director of the International Monetary Fund (IMF), Petya Koeva, told EFE.
“Compared to many other countries, Spain is in a relatively good position to face the ‘shock’. The main channel is through oil prices, because, again, in relation to fuel prices, the transmission of those prices is limited by the high proportion (of renewables) that Spain has,” said Koeva, deputy director of economic studies at the IMF.
