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'A Very Dark Picture': IMF Warns Trump's Iran War Could Unleash Global Recession
One expert called the new IMF forecast "extremely concerning for the global economy," noting that "the most dire impacts of our economic situation will be felt by the poor and the vulnerable."
Apr 14, 2026
The International Monetary Fund warned Tuesday that the US-Israeli war on Iran could slow global economic growth, stoke inflation, and increase the possibility of a worldwide recession and energy crisis.
The illegal war of choice on Iran being waged by US President Donald Trump and the government of fugitive Israeli Prime Minister Benjamin Netanyahu has already had wide-ranging negative impacts on the global economy, from soaring fuel prices caused by the closure of the Strait of Hormuz to supply chain disruptions and financial market volatility.
However, a major global economic crisis has thus far been averted. That could soon change.
"Despite major trade disruptions and policy uncertainty, last year ended on an upbeat note," International Monetary Fund director of research Pierre-Olivier Gourinchas wrote in an analysis of the IMF's latest World Economic Outlook report. "The private sector adapted to a changing business environment, while powerful offsets came from lower US tariffs than originally announced, some fiscal support, and favorable financial conditions coupled with strong productivity gains and a tech boom."
"Despite some downside risks, the momentum was expected to carry over into 2026, lifting the pre-conflict global growth forecast to 3.4%," Gourinchas continued. "War in the Middle East has halted this momentum. The closing of the Strait of Hormuz and serious damage to critical facilities in a region central to global hydrocarbon supply raise the prospect of a major energy crisis should hostilities continue."
The IMF said that even if the war ends quickly, lasting damage to the world's economy will still happen.
According to the IMF report:
Under the assumption of a limited conflict, global growth is projected at 3.1% in 2026 and 3.2% in 2027, below recent outcomes and well under pre-pandemic averages. Global inflation is expected to tick up in 2026 and resume its decline in 2027. Pressures are concentrated in emerging market and developing economies, especially commodity importers with preexisting vulnerabilities. Risks are decisively on the downside. A prolonged conflict, deeper geopolitical fragmentation, disappointment over [artificial intelligence]-driven productivity, or renewed trade tensions could weaken growth and unsettle markets. High public debt and eroded policy buffers add vulnerability. Policies should foster adaptability, enhance credibility, and reinforce international cooperation.
The IMF said that "the shock’s ultimate magnitude will depend on the conflict’s duration and scale—and how quickly energy production and shipment normalize once hostilities end," and that effects will vary by location.
"Countries will feel the impact differently," Gourinchas wrote. "As in past commodity-price surges, importers are highly exposed. Low-income and developing economies—especially those with vulnerabilities and limited buffers—are likely to be hit hardest. Gulf energy exporters will face economic fallout from damaged infrastructure, production disruptions, export constraints, and weaker tourism and business activity. Remittances will fall in countries that supply migrant workers to the region."
Eric LeCompte, executive director of the religious development group Jubilee USA Network and a United Nations finance expert, called the new IMF forecast "extremely concerning for the global economy," lamenting that "the most dire impacts of our economic situation will be felt by the poor and the vulnerable."
The new report comes as the IMF's annual Spring Meetings are underway in Washington, DC.
“World leaders coming to Washington are receiving a very dark picture of the global economy,” said LeCompte. “The war is causing greater poverty and increases in our fuel and food costs."
Other groups have also warned of the adverse economic effects of the US-Israeli war on Iran.
Ben May, Bridget Payne, and Paul Moroz of Oxford Economics recently published a report warning that a longer war in Iran "could tip the global economy into recession."
In such a situation, "the Gulf states suffer most acutely—GDP down over 8% in 2026—before rebounding sharply as production recovers," they wrote. "Advanced Asian economies, which are especially reliant on Gulf oil, take a heavy blow from energy import cost surges and supply chain disruption."
"Europe faces a painful squeeze on gas and electricity," the trio added. "The US fares somewhat better given its domestic energy production, but an equity market decline of nearly 20% weighs heavily on consumer spending."
Some US-based organizations have focused on the war's domestic economic impacts.
Dean Baker, a senior fellow at the Center for Economic Policy Research, published an analysis earlier this month asserting that "making enemies makes us poorer."
"Secretary of Defense (or War) Pete Hegseth seems to be having a really great time killing people in Iran, but his live action video games come at a big cost—not just in lives, but in budget dollars," Baker wrote. "To be clear, the main reason to oppose this pointless war is its impact on the people of Iran and elsewhere in the region. But it also has a huge economic cost that is seriously underappreciated."
"In addition to reducing our security and jeopardizing the well-being of people around the world, Donald Trump’s belligerence will cost us a huge amount of money," he said. Focusing on US military spending, Baker noted that "Trump wants the country to spend 5% of GDP, or $1.5 trillion a year, on the military. This comes to $12,000 per household."
Trump and his Republican Party are seeking to offset some of their record military spending with devastating cuts to social programs upon which tens of millions of Americans rely. Already reeling from the biggest cuts to Medicaid and Supplemental Nutrition Assistance Program spending in those programs' histories, Trump’s budget request for fiscal year 2027 contains $73 billion in total reductions in nondefense spending.
"It is striking to see that Congress might be willing to quickly cough up this money," said Baker, referring to military funding, "when it has refused far smaller sums that could have made a huge difference in the lives of tens of millions of people."
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State Department Pushes Human Rights Watchdog to Ignore Deadly, Illegal Boat Strike Campaign
As the Inter-American Commission on Human Rights was advised not to investigate the bombings, Pentagon officials expressed support for strikes on land, ostensibly against drug traffickers.
Apr 14, 2026
The former president of a top international human rights watchdog views the United States' monthslong campaign of bombing boats in the Caribbean Sea and eastern Pacific Ocean as a clear-cut case of "murder," he told The Intercept Monday, but he warned that pressure from the Trump administration may stop the body from investigating the Pentagon's actions.
Juan Méndez, a former president of the Inter-American Commission on Human Rights, noted that a month after the IACHR held a hearing on the boat bombing campaign, officials "may well feel that this is a very delicate situation, and if they take the initiative, they’re going to incur the wrath of the United States."
The hearing last month was the first of its kind and included testimonies from the ACLU, the Center for Constitutional Rights, International Crisis Group, and Ben Saul, the United Nations special rapporteur on counterterrorism and human rights. The groups presented evidence that the US has been violating both domestic and international law by bombing vessels that it has claimed—without making any evidence publicly available—are involved in drug trafficking. Nearly 170 people have been killed in dozens of strikes, and legal experts worldwide have asserted the US is violating international law and has committed extrajudicial killings—potentially making those involved in the strikes liable for murder.
The hearing was followed by a statement from Tommy Pigott, a State Department spokesperson, who said the IACHR had "strayed far outside its mandate” by looking into the boat attacks—as the family of one man killed in a bombing requested it to—and accused the ACLU of trying to manipulate the body.
"The United States calls on the commission to adhere to its statute and rules of procedure in the future and avoid inserting itself into matters that are in active domestic litigation and fall outside the human rights sphere," said Pigott. "Convening hearings under these circumstances risks undermining—not strengthening—the credibility of the inter-American human rights system."
Pigott also called on the commission to "redirect its focus toward the individual petitions languishing on its docket, sometimes for decades." He did not mention specific petitions or issues the IACHR should focus on.
Carl Anderson, a legal adviser at the State Department, also rebuked the commission for holding the proceedings.
"If the United States cuts the funding, they probably would have to shut down—at least for a while.”
A person with close ties to the IACHR told The Intercept that Pigott's demand that the commission focus on other topics pointed to a pressure campaign aimed at stoking fear that the IACHR could lose its funding.
President Donald Trump's zeroed out US contributions to the commission during his first term in 2018, and withdrew some funding the following year due to its support for abortion rights. The administration terminated funding last year for at least 22 programs under the IACHR's parent body, the Organization of American States, of which the US is the largest international funder.
“They are stretched for funding," Méndez told The Intercept. "And if the United States cuts the funding, they probably would have to shut down—at least for a while.”
Stuardo Ralón, the IACHR's current president, denied that there is "pressure from the United States on the Inter-American Commission on Human Rights," but suggested it may not conduct a comprehensive investigation into the Trump administration's boat bombings—saying the body "does not conduct investigations."
The Intercept noted that the IACHR has conducted numerous investigations that it has publicly acknowledged and described as such, including into US immigration detention centers and the kidnapping and apparent killing of 43 students in Mexico in 2014.
Ralón told the outlet that it has not yet taken any steps to launch an investigation into the strikes following the hearing, and said it "will continue to monitor the situation in accordance with its mandate."
Jamil Dakwar, director of the ACLU’s human rights program, emphasized that "the commission is within its competency and its bounds to fully investigate the egregious violations of international law happening in its own backyard.”
“We have asked the commission to fulfill its responsibilities as the premier regional human rights body to conduct a fact-finding investigation of these heinous killings," Dakwar told The Intercept, "and to ensure that no country can act in this fashion because that will have severe implications on human rights in the region and beyond."
As the State Department has pushed the IACHR away from probing the legality of the boat bombings, administration officials like Joseph Humire, acting assistant secretary of war for homeland defense and Americas security affairs, have warned that the attacks at sea are "just the beginning" of what officials claim is an effort to defeat drug cartels—against which Congress has not authorized any military action.
US Southern Command announced a joint ground operation with Ecuador last month to defeat "narco-terrorists."
Humire said the Pentagon supports "joint land strikes," while Gen. Francis Donovan, the head of US Southern Command who has been directing the boat attacks, told the Senate Armed Service Committee that the Pentagon is moving toward "a counter-cartel campaign process that puts total systemic friction across this network."
"I believe," he said, "these kinetic [boat] strikes are just one small part of that.”
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Harvard Expert Says She Is 'Certain' Price Tag of Trump's Illegal Iran War Will Hit $1 Trillion
"The interest costs alone will add billions of dollars to the total cost of this war," said Linda Bilmes. "And unlike the upfront costs, these are costs we are explicitly passing on to the next generation."
Apr 14, 2026
A Harvard expert who specializes in looking beyond official government estimates to calculate the true financial cost of US wars has said she is "certain" the price tag of President Donald Trump's assault on Iran will eventually reach at least $1 trillion, once benefits for troops, replenishment of munition stockpiles, borrowing costs, and other factors are fully taken into account.
“We are borrowing to finance this war at higher rates, on top of a much larger debt base,” Linda Bilmes, the Daniel Patrick Moynihan senior lecturer in public policy at the Harvard Kennedy School, said in a recent interview. "The result is that the interest costs alone will add billions of dollars to the total cost of this war. And unlike the upfront costs, these are costs we are explicitly passing on to the next generation."
Bilmes, who co-authored The Three Trillion Dollar War: The True Cost of the Iraq Conflict with Nobel laureate economist Joseph Stiglitz, estimates that the first several days of the US-Israeli assault on Iran cost American taxpayers at least $16 billion—significantly more than the Pentagon's official figure, $11.3 billion.
"The short-term costs are even higher than they appear," Bilmes emphasized. "The Pentagon reports costs based on the historical value of inventory, instead of the actual cost it takes to replace what we are using. And those replacement costs are far higher."
Bilmes also pointed to the substantial costs of "large, multi-year contracts" the Trump administration has inked with arms manufacturers such as Lockheed Martin.
Over the long-term, said Bilmes, the cost of veterans' care will be massive. "We now have roughly 55,000 US troops deployed in this conflict who have been exposed to toxins, contaminants, and environmental hazards, such as burning fuel and chemical residues that we know can cause long-term harm," she noted. "If even one-third of the 55,000 troops deployed today claim benefits, then we are committing ourselves to tens or hundreds of billions of dollars in disability and medical care costs for this cohort alone."
"I am certain we will spend $1 trillion for the Iran war," Bilmes said. "Perhaps we have already racked up that amount."
The Trump administration is expected to request that Congress approve between $80 billion and $100 billion in funding for the Iran war, according to The Washington Post. Earlier this month, the Trump White House released a budget proposal that called for $1.5 trillion in military spending next fiscal year.
Bilmes noted that if Trump's request is fully enacted, US military spending would rise "to levels about 20% higher than the peak reached during World War Two."
"This raises the baseline," Bilmes said. "Even if Congress does not agree to approve the full increase, it is highly likely that at least $100 billion per year will be added to the base defense budget that would not have been approved in the absence of this war."
"And once that increase is built into the base," she added, "it raises the baseline and compounds—so an additional $100 billion per year is $1 trillion over the next decade."
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