Bessent Says U.S. Economy Could Still Grow Above 3% Despite Iran War Shock

Scott Bessent said the U.S. economy could still grow more than 3% this year, possibly 3.5%, even as the Iran war pushed up oil prices, shook inflation expectations and unsettled global markets. The upbeat forecast immediately ran into a harsher reality: energy shocks from the Middle East are already forcing economists to cut growth estimates and warn that a wider conflict could quickly erase the optimism.

Speaking at a Wall Street Journal Opinion Live event in Washington, Bessent argued that the underlying U.S. economy remained strong enough to absorb the hit and said the IMF and World Bank had probably overreacted to the war-driven shock. The administration’s message is clear: if the conflict stays contained, the domestic economy may keep its footing. But that case depends on oil, shipping and market sentiment not deteriorating further, a narrow path when higher fuel costs can ripple through household budgets, transportation and business inputs within days.

The IMF’s new forecasts show how fragile that outlook is. It cut its 2026 U.S. growth forecast to 2.3% and lifted its global inflation expectation to 4.4%. For the world economy, the fund said growth would slow to 3.1% in 2026 and 3.2% in 2027 if the conflict remained limited, while a reference forecast without the Middle East shock would have been 3.4%. The IMF’s own scenarios make the downside explicit: if oil averages about $100 this year, global growth falls to 2.5%, and a severe financial disruption could drag it to 2.0%.

The World Bank painted an equally sobering picture for the region most exposed to the fighting. It said growth in the Middle East, North Africa, Afghanistan and Pakistan region, excluding Iran, is expected to slow from 4.0% in 2025 to 1.8% in 2026, a downgrade 2.4 percentage points below January projections. The bank also said the Strait of Hormuz, through which about 20% of global oil consumption and liquefied natural gas trade flows, has been effectively blocked, a reminder that the war’s economic reach extends well beyond the Gulf.

Bessent also separately criticized China for hoarding oil supplies and restricting some exports during the conflict, saying he had spoken with Chinese officials about the issue. He has pushed for faster rate cuts before, but said on April 14 that he would understand if the Federal Reserve wanted to wait. That split-screen posture captures the administration’s dilemma: defend a still-resilient growth story while the war’s inflationary shock remains far from settled.