April 14, Kathmandu – The International Monetary Fund (IMF) has reported that the ongoing conflict in West Asia has caused the global economic growth forecast to decline by 0.3 percent. Previously, the IMF had projected a 3.4 percent growth for the world economy in 2026; this has now been revised downward to 3.1 percent. Nepal’s economic growth is estimated at 2.95 percent for this year, with expectations of a 4.5 percent increase for the following year.
Positive signals for the global economy were emerging at the start of 2026 due to shifts in the business landscape, tariff reductions by the United States, and advancements in technology. However, the IMF clarified that the war that began in West Asia in February has disrupted this momentum.
On Tuesday, IMF Chief Economist Pierre-Olivier Gourinchas stated in the flagship publication World Economic Outlook, “The Middle East conflict is preventing economic growth from stabilizing, and effective policies along with strong global cooperation are essential to mitigate the damage.” The IMF further noted that if the conflict prolongs and energy infrastructure sustains additional damage, global growth rates could fall by as much as 2 percent. The theme of this report is titled, “The Global Economy in the Shadow of War.” Although there are reports of temporary ceasefires, the IMF emphasizes that significant damage has already occurred and the risk of further growth decline remains substantial.
The report highlights that financially vulnerable and developing countries heavily dependent on imports will be the most affected. It warns that poor nations and their populations face the highest risk due to rising prices. Gourinchas added, “Countries in West Asia that supply labor will experience a reduction in remittance flows,” creating worrisome conditions for nations like Nepal. Drawing lessons from the 2022 Ukraine conflict, the IMF advises governments that “price controls and export restrictions do not solve problems; rather, they have counterproductive effects.”
