IMF Raises Russia Growth Forecast to 1.1% Amid Higher Energy Prices and Middle East Tensions

The International Monetary Fund (IMF) has revised its growth outlook for Russia, now projecting a GDP expansion of 1.1% in 2026, an increase of 0.3 percentage points from its forecast in January. This adjustment is largely attributed to higher global commodity prices, which have been influenced by renewed tensions in the Middle East that have disrupted energy markets. The IMF anticipates that Russia’s economic momentum will persist into 2027, with inflation expected to decrease from 8.7% in 2025 to 5.6% in 2026 and further to 4.3% in 2027.

In contrast, Russia’s Economic Development Ministry has presented an even more optimistic forecast, estimating GDP growth of 1.3% in 2026 and 2.8% in 2027. The IMF’s upward revision coincides with the ongoing US-Israeli conflict with Iran, which has led to retaliatory strikes that have unsettled global energy supplies. This situation has severely affected flows through the Strait of Hormuz, a crucial passage for a substantial portion of the world’s oil and gas. The IMF warns that prolonged hostilities could result in a “major energy crisis,” particularly impacting countries that rely heavily on energy imports.

In light of these developments, the IMF has downgraded its global growth forecast to 3.1% for 2026, down from 3.4%, with a modest rebound expected to 3.2% in 2027. The organization notes that, without the conflict in the Middle East, global growth projections would have been revised upward. Additionally, the euro area has experienced a reduction in its growth outlook, reflecting the negative effects of the conflict alongside the lingering impact of elevated energy prices since the escalation of the Ukraine conflict. Manufacturing activity has been adversely affected, further compounded by the pressures resulting from the appreciation of the euro.

IMF Managing Director Kristalina Georgieva emphasized last week that the conflict in the Middle East has caused a significant global energy supply “shock,” with world oil output already reduced by 13%. This disruption is reverberating through energy, commodities, and fertilizer markets, highlighting the extensive economic consequences of the ongoing conflict.