Oil Crisis Hits World Growth Outlook as Forecasts Revised Down in World Economy News 06/06/2026 World growth prospects have been hurt by the oil crisis prompted by the US-Iran war, Fitch Ratings says in its latest Global Economic Outlook (GEO). This has led to Fitch lowering its 2026 forecast for global growth by 0.2pp to 2.4%. Forecast cuts have been widespread as higher inflation squeezes real wages, dampens consumption and raises companies’ input costs. But the impact of the oil shock on global activity is being cushioned by stronger-than-expected momentum in AI-related IT investment, supporting world trade and Asian exports. We have lowered 2026 growth forecasts since the March GEO in the US and eurozone by 0.3pp and 0.4pp, respectively to 1.9% to 0.9%. Growth in emerging markets excluding China has been lowered by 0.2pp to 3.2% but China’s forecast has been raised by 0.3pp to 4.6% following surprisingly good data in 1Q26 and remarkable resilience in exports. We have also raised Korea’s forecast as export prospects benefit from the boom in global technology spending. “The oil price shock is hitting world growth prospects and increasing downside risks. But we are also amid a very pronounced boom in global spending on IT and that is cushioning the impact on activity in the near term, particularly in Asia,” said Brian Coulton, Chief Economist. The closure of the Strait of Hormuz has now lasted 14 weeks and we assume it will not start to reopen until July. We have revised our 2026 average price assumption for Brent crude to USD87 a barrel (bbl) from USD70/bbl in the March GEO. The oil shock is a strong headwind to world growth, but our base case is far less severe than the pernicious oil shocks of the 1970s. Real oil prices reached USD170/bbl in 1979 (measured in current prices) and OPEC played a very different role then. Oil consumption as a share of world GDP has halved since 1980. Nevertheless, with geopolitical uncertainties remaining high, we also examined an a