IMF lowers growth outlook, warns of global recession if Iran oil shock is severe

The IMF downgraded its global growth forecast, citing heightened risks of a severe oil supply disruption if tensions involving Iran escalate, which could trigger a sharp spike in energy prices. The primary transmission channel is through elevated oil prices impacting global inflation and demand, particularly in energy-importing emerging markets and developed economies already facing tight monetary conditions. Energy equities and oil-sensitive currencies like the Canadian dollar and Norwegian krone may see volatility, while safe-haven assets such as U.S. Treasuries and gold could gain appeal amid risk-off sentiment. A key catalyst to watch is the upcoming U.S. CPI report, which will clarify whether second-round inflation effects from higher energy costs are embedding into core prices, potentially influencing central bank policy trajectories.

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