IMF says global economy holds steady despite Middle East war, Europe faces prolonged slowdown

International Monetary Fund chief Kristalina Georgieva said there are no signs yet of a worldwide economic slowdown, but the conflict in the Middle East poses a clear risk to growth. She praised the U.S.–Iran agreement to end hostilities and reopen the Strait of Hormuz, while warning that any escalation could hurt the global outlook. The IMF will release an updated forecast on 8 July.

In Europe, the war’s impact on energy prices and higher inflation is extending a slowdown that was expected to be brief. Barclays now projects Euro‑area growth of just 0.7% this year, with a modest 0.9% rise next year, and the European Commission expects growth of only 1.4% in 2024 and inflation around 2.4%. Higher interest rates and continued supply disruptions are expected to keep the region’s recovery subdued through 2027.