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The war in the Middle East will weigh on the European economy in 2026, warns the IMF.

The International Monetary Fund (IMF) lowered its growth forecast for the euro area by 0.2 points to 1.1% for 2026 compared to its January estimates, citing “the negative impact” of the war in the Middle East.

All major economies are affected by the slowdown in economic activity in the euro area, which, after growth of 1.4% in 2025, would be more affected than the United States. The forecast is reduced to 0.8% in Germany (-0.3 points), 0.5% in Italy (-0.2), 2.1% in Spain (-0.2) and 0.9% in France (-0.1).

“The growth that was better than anticipated at the end of 2025 is counterbalanced, in the long term, by the negative impact of the conflict in the Middle East,” the IMF wrote in its report presenting its new global forecasts (WEO).

The international organization also emphasizes the appreciation of the euro, which weakens European competitiveness. Outside the European Union, the United Kingdom is harder hit (-0.5 points to 0.8%), with the IMF mentioning, in addition to the war, a less rapid decrease in the central bank’s key rate than in the euro area.

Growth forecasts are also revised downwards for 2027 in the euro area, by 0.2 points to 1.2%. Economic activity would progress by 1.2% in Germany (-0.3 points), 0.9% in France (-0.3), 0.5% in Italy (-0.2), and 1.8% in Spain (-0.1). Outside the EU, it would reach 1.3% (-0.2) in the United Kingdom.

“The impact of the planned increase in defense spending in most countries should materialize only in the following years, given the commitments to gradually reach spending targets by 2035,” notes the IMF.

After 2.1% in 2025, the rise in energy prices due to the war is expected to lead to an increase in inflation, to 2.6% in 2026 and 2.2% in 2027, above the European Central Bank’s (ECB) 2% target, projects the international organization.

The spring meetings of the IMF and the World Bank are taking place in Washington until April 18. In this context, France, which chairs the G7 this year, plans to hold a physical meeting of finance ministers and central bank governors of this group, including Germany, Canada, the United States, France, Italy, Japan, and the United Kingdom, according to the agenda of the French minister Roland Lescure.

These countries also plan to exchange critical minerals on Friday.

[Context: The IMF has adjusted its growth forecast for the Eurozone due to the negative impact of the war in the Middle East on the European economy.]

[Fact check: The IMF predicts that the rise in energy prices resulting from the conflict will lead to higher inflation rates in the coming years, above the ECB’s target.]