IMF cuts Australian economic growth forecast
Sydney (10 July)
The International Monetary Fund (IMF) has downgraded its 2026 Australian real economic growth rate forecast to 1.9%, from 2% in April, largely because of Iran war-related supply chain disruptions and oil price hikes.
IMF’s growth forecast assumes that Iran will start to reopen the Strait of Hormuz in mid-July and normalise shipping conditions by March 2027, it said on 9 July. But it also assumes that policy and geopolitical uncertainty will remain elevated through 2027, IMF Deputy Director Petya Koeva Brooks said at a press conference.
“A renewed escalation in the [Iran] conflict could reignite commodity price volatility, tighten financial conditions, strain policy buffers, and worsen food insecurity in low-income countries,” Koeva Brooks added.
The IMF expects global headline inflation to reach 4.7% in 2026, up from 4.1% in 2025, the agency said. It has lifted its 2026 global inflation forecast by 0.3% points, from 4.4% in April, because of elevated commodity price expectations.
Global petroleum spot prices and non-fuel commodity import prices will rise by 32% and 19% on the year in 2026, respectively, IMF forecasts indicate. Brent crude futures last traded at $76.91/barrel on 9 July, up from $71.57/barrel on 1 July because of the collapse of the US-Iran Peace Deal.
On 8 July, the US Government responded to Iranian ship attacks in the Strait of Hormuz with a bombing campaign – which targeted over 80 sites, including 60 military boats – and a declaration that the US-Iran Peace Deal is over.
US forces have since bombed another 90 Iranian military and infrastructure targets, US Central Command (Centcom) said on 9 July. US forces remain vigilant and prepared to carry out operations directed by the President, Centcom added.
The IMF did not update its Australian 2026 inflation forecast on 9 July. The Reserve Bank of Australia expects annual consumer inflation to peak at 4.8% in June 2026, under its baseline economic forecast, it said on 5 May.
By Avinash Govind