The International Monetary Fund on Wednesday inched its 2026 global growth forecast lower again to a sluggish 3.0%, warning of ongoing risks linked to the war in the Middle East, trade fragmentation and potential corrections in market expectations for AI.
The global lender said the world economy had dodged a sharper downturn, with demand for AI and other technologies helping to offset a sharp drop in energy supplies as a result of the war. Growth should rebound to 3.4% in 2027, but that is still below the average of 3.5% seen in 2024 and 2025. In April, the IMF had forecast 3.1% growth.
The inflation outlook was less rosy. The IMF raised its 2026 headline inflation forecast by 0.3 percentage points to 4.7% from April, and said it should drop to 3.9% next year. Energy prices were 25% higher now than before the war began on February 28 and would remain higher, it said.
The new forecast, which was locked in on June 10, assumes the Strait of Hormuz will start to reopen in mid-July, with traffic gradually normalizing to reach prewar conditions by March 2027. It assumes an average oil price of $89 per barrel.
"In effect, we expect a V-shaped recovery, weaker growth this year relative to our pre-war forecast, followed by a rebound next year," Petya Koeva Brooks, deputy director of the IMF's research department, told reporters. "The world economy has weathered the shock from the war better than feared so far, with limited evidence of second round effects."
