12:55 PM EDT, 07/08/2026 (MT Newswires) -- The International Monetary Fund lowered global economic growth expectations for 2026 as the impact of the Middle East war will likely counter a boost from rising artificial intelligence adoption.

The IMF now projects real gross domestic product for the world to grow by 3% this year, down 0.1 percentage points from its prior forecast in April. The latest projection represents a slowdown from a 3.5% rate in 2025, according to the IMF.

"The modest slowdown reflects the effects of the war in the Middle East being partly offset by accelerated demand-driven momentum in the global technology cycle, thanks to advances in artificial intelligence and its adoption," the IMF wrote in its latest world economic outlook update Wednesday. "The impact varies widely based on countries' exposure to the war and position in the technology value chain."

US growth is projected at 2.3% in 2026, unchanged from April.

President Donald Trump threatened additional strikes against Iran on Wednesday following renewed hostilities between Washington and Tehran. Trump said the memorandum of understanding agreed with Iran last month is "over."

For 2027, the IMF expects global GDP to accelerate to 3.4%, up 0.2 percentage points from its previous estimate. The US outlook improved by 0.1 percentage points to 2.2%.

The global economy has so far weathered the effects from the war "better than feared," with relatively limited repercussions from elevated commodity prices, according to the IMF.

The agency raised its global inflation forecasts to 4.7% and 3.9% in 2026 and 2027, respectively, from 4.4% and 3.7% previously projected.

"These projections indicate that the disinflation trend in place since the beginning of 2024 has stalled," according to the IMF.

Risks to the outlook remain tilted to the downside as the possibility of a renewed Middle East conflict "looms large," the IMF said. A potential correction in technology expectations could also weigh on estimates.

"Upside risks stem from a swifter-than-expected normalization in energy markets, stronger-than-expected technology investment, a revival of durable cooperation that lowers trade barriers, and structural reform that raises medium-term growth," the agency wrote.