JPMorgan Cuts Global Growth by 0.25 Point as Iran War Pushes Core Inflation Above 3%
Updated
Updated · Business Insider · May 25
JPMorgan Cuts Global Growth by 0.25 Point as Iran War Pushes Core Inflation Above 3%
3 articles · Updated · Business Insider · May 25
JPMorgan dropped its 2026 “Goldilocks” call and cut its global growth forecast by about a quarter percentage point, saying the Iran war’s energy shock now points to weaker growth and higher unemployment.
Oil-driven costs are expected to push global core inflation above 3% and core goods inflation above 2%, with the bank warning that higher rates, softer consumer spending and weaker hiring could follow.
U.S. inflation already hit 3.8% in April and gasoline reached $4.56 a gallon last week, reinforcing market fears that the price surge will outlast any immediate geopolitical de-escalation.
JPMorgan also flagged fragile supply chains, still-elevated wage pressures and rising short-term inflation expectations—up 124 basis points since March to 3.53%—as forces that could deepen the growth shock before inflation eases.
The Iran war crippled the economy. What is the next geopolitical time bomb for global markets?
Can central banks tame war-fueled inflation without crashing the global economy?
Global Economic Outlook 2026: Iran War Triggers Energy Shock, Inflation Surge, and Stagflation Risks
Overview
The global economic outlook has worsened sharply since May 2026, mainly due to the ongoing conflict in Iran that began in late February. This war has triggered cascading effects on energy markets and inflation, leading to higher oil prices and persistent inflation risks. As a result, major financial institutions and international bodies have issued revised forecasts and warnings. JPMorgan Chase CEO Jamie Dimon has highlighted substantial risks, including the threat of rising inflation and potential commodity price shocks, which increase the likelihood of higher interest rates. These developments signal a challenging period ahead for the world economy.