At a Glance:
- IMF cuts 2026 global growth forecast to 3.1%
- Downside risks could extend throughout manufacturing chain on which furniture relies
- Asia and lower-income economies likely to see the brunt of early impacts
WASHINGTON — The International Monetary Fund has downgraded its global growth outlook, warning that escalating conflict in the Middle East — now compounded by a near shutdown of the Strait of Hormuz — is disrupting trade, fueling inflation and complicating policymaking worldwide.
In an April 14 blog post, the IMF said global growth momentum entering 2026 has been “halted” by the conflict, which has driven up energy prices and heightened uncertainty.
Growth is now expected to slow to roughly 3.1% in 2026, down from earlier projections of about 3.4%, with risks tilted further to the downside.
Strait of Hormuz disruption amplifies shock
The economic impact has intensified following new developments in the region. On April 12, Donald Trump announced a blockade of “any and all ships” attempting to pass through the Strait of Hormuz, a critical global shipping corridor.
The move followed weeks of threats from Iran targeting vessels that did not pay multimillion-dollar transit fees. Together, the actions have effectively halted traffic through one of the world’s most important commodity routes.
According to analysis from the Atlantic Council, the closure represents a dual shock: an immediate supply disruption and a longer-term restructuring of global trade flows.
Before the conflict, the Gulf region accounted for a significant share of global commodity exports, including roughly 20% of seaborne jet fuel, 10% of diesel, 23% of ammonia and 33% of helium production. It also supplied half of global seaborne sulfur and about 9% of aluminum.
Supply shock spreads as longer-term disruption looms
The sudden collapse of shipping through the strait is forcing producers worldwide to scramble for alternative sources of key inputs. That competition is driving up costs across multiple sectors, from agriculture to manufacturing.
In addition to direct impacts on fuel and diesel prices, higher oil prices will exact tolls throughout the supply chain on which furniture manufacturing relies, especially plastics, which is primarily made from hydrocarbon feedstocks, and aluminum.
As supply tightens, the burden is expected to fall unevenly. Wealthier nations are more likely to secure limited resources at higher prices, while middle-income countries may resort to rationing or reduced consumption. Lower-income regions — including manufacturing hubs like Vietnam and China — face the most severe consequences, with shortages likely to limit access altogether.
Even if shipping resumes in the near term, the IMF and Atlantic Council warn that the effects of the disruption could persist for months or longer. Damage to regional refining capacity and export infrastructure may take years to fully repair, while uncertainty surrounding the conflict could deter a swift return to normal shipping patterns.
In some scenarios, companies may continue relying on alternative supply chains developed during the war, particularly if a cease-fire proves fragile.
Inflation, policy trade-offs intensify
The IMF said rising energy and commodity prices are expected to push inflation higher, complicating central bank efforts to stabilize prices without undermining growth.
Emerging markets and energy-importing economies are particularly vulnerable, facing currency volatility, higher import costs and reduced capital inflows. Growth forecasts for these economies have been revised downward accordingly.
The inflation worries come as mounting political pressure on the United States Federal Reserve is adding another layer of uncertainty to the outlook, particularly as policymakers weigh how to respond to energy-driven price increases. President Donald Trump has threatened to remove Fed Chair Jerome Powell if he does not step down after his term ends next month, intensifying a longstanding public dispute centered on interest rates and inflation strategy.
Global ripple effects
The disruption is already reverberating across regions. Asia — including India, China and Southeast Asia — relies heavily on Gulf commodity imports, while Africa depends significantly on diesel supplies from the region. Aluminum shortages, in particular, could affect manufacturing in the Americas.
The IMF emphasized that policymakers now face a narrow path forward: balancing inflation control with economic support while maintaining financial stability in an increasingly uncertain global environment.
While the baseline outlook assumes the conflict remains contained, the fund warned that a prolonged or escalating crisis could push global growth closer to 2%, raising the risk of a broader downturn.
