Global growth forecasts slashed
The IMF's latest World Economic Outlook cut global growth projections to 3% for 2026, citing the compounding effects of the Iran war, elevated inflation, and supply chain disruptions. The downgrade reflects a sharp reassessment from earlier forecasts, as energy prices remain the primary driver of economic uncertainty. The IMF warned that a prolonged conflict could push growth below 2.5%.
ECB raises rates as energy inflation bites
The European Central Bank raised interest rates for the first time since 2023, responding to energy-driven inflation that pushed eurozone consumer prices to 4.2% annually in May — the highest in three years. The rate hike came as crude oil prices climbed above $110 per barrel following renewed U.S.-Iran hostilities. ECB President Christine Lagarde cited 'persistent energy cost pressures' as the primary driver of the decision.
U.S. job market shows cracks
The U.S. labor market showed signs of cooling in June, with nonfarm payrolls adding only 57,000 jobs compared to 218,000 in May. The unemployment rate ticked down to 4.2%, but the labor force participation rate fell to its lowest in 50 years outside the COVID-19 era. Factory job cuts in June approached levels seen during the 2008 financial crisis and the early pandemic, according to S&P data.