Key facts
- IMF forecasts global growth at 3.0% for 2026, with a rebound to 3.4% in 2027.
- Renewed Middle East conflict poses the most imminent risk to the global economic forecast.
- A resurgence of conflict could increase commodity price volatility, threaten supply chains, and raise prices.
- Depleted oil stocks mean supply disruptions could lead to stress levels.
- Higher food and energy prices risk social unrest in vulnerable economies.
- Headline inflation is projected to rise to 4.7% in 2026 before declining.
The International Monetary Fund (IMF) has lowered its global growth forecast for 2026 to 3.0%, citing persistent risks from renewed Middle East conflict, trade fragmentation, and potential market corrections. The fund warned that a resurgence of conflict in the region could extend commodity price volatility, threaten supply chains, raise prices, and weigh on financial conditions, particularly given depleted oil stocks.
Headline inflation is projected to increase to 4.7% in 2026 before declining to 3.9% in 2027. The IMF's forecast assumes that energy prices will remain elevated due to the conflict, with European gas prices nearly $16 higher than pre-war levels. Food prices could rise by up to 8% due to increased fertilizer and transport costs.
Deniz Igan, chief of the IMF Research Department's World Economic Studies division, noted that while the global economy has shown resilience, partly due to tech sector momentum, renewed conflict in the Middle East would leave it more vulnerable. The forecast assumes the Strait of Hormuz will begin reopening in mid-July and return to pre-war conditions by March 2027.
Specific regional forecasts include unchanged US growth at 2.3% for 2026, a lowered Euro area forecast to 0.9%, and Japan's to 0.6%. Emerging markets are projected to grow at 3.8%, while China's forecast was raised to 4.6% and India's slightly downgraded to 6.4%. The Middle East and Central Asia region faces a significant cut to its 2026 growth forecast, now at 0.7%.