IMF and Fitch downgrade global outlook amid US‑Iran war

Fitch Ratings moved its 2026 global sovereign sector outlook to “deteriorating” from “neutral”, warning that the US‑Iran conflict will weaken GDP growth, raise inflation and bond yields, and increase geopolitical risks. The agency upgraded Greater China to “neutral” because of strong AI‑related exports and robust energy buffers, while noting that most Gulf Cooperation Council sovereigns remain resilient due to solid balance sheets.

The International Monetary Fund trimmed its global growth forecast for 2026 to 3%, down from 3.5%, citing an energy shock caused by Iran’s shutdown of the Strait of Hormuz. Oil prices are projected to be about 32% higher, pushing global consumer inflation to 4.7% in 2026. The IMF expects the United States to grow 2.3% this year, the euro‑zone to expand only 0.9%, China 4.6% and India 6.4%, while noting that artificial‑intelligence investment helps offset some of the war‑related damage.