IMF lowers 2026 global growth forecast amid Mideast risks

NEW YORK - The International Monetary Fund on Wednesday projected that global growth will slow to 3.0 percent in 2026 before recovering to 3.4 percent in 2027.

This is down from the average of 3.5 percent of growth in 2025, and is also slightly down from the 3.1 percent projection in the April 2026 World Economic Outlook report. The modest slowdown reflects the effects of the war in the Middle East, which are partly offset by accelerated demand-driven momentum in the global technology cycle, driven by advances in artificial intelligence and its adoption, the July report said.

Based on the projections of higher energy prices, less supportive monetary policy and elevated policy and geopolitical uncertainty through 2027, global headline inflation is expected to increase from 4.1 percent in 2025 to 4.7 percent in 2026 before declining to 3.9 percent in 2027, slightly upward from the April projection, the IMF said.

World trade volume growth is projected to slow sharply from 5.0 percent in 2025 to 3.5 percent in 2026 before recovering to 4.3 percent in 2027, it added.

The report said economic growth in advanced economies is projected at 1.7 percent in 2026 and 1.8 percent in 2027. Specifically, the growth in the United States is projected at 2.3 percent in 2026 and 2.2 percent in 2027, virtually unchanged from April; the euro area is projected to grow at 0.9 percent in 2026 and 1.2 percent in 2027, with the 2026 forecast 0.2 percentage point lower than in the April report; and Britain's growth is projected to fall to 1.0 percent in 2026 before recovering to 1.3 percent in 2027 as the energy shock fades.

Growth in emerging market and developing economies is expected to slow to 3.8 percent in 2026 before recovering to 4.5 percent in 2027, the report said.

China is expected to grow 4.6 percent in 2026, 0.2 percentage point higher than the April forecast -- one of the few major economies to receive an upward revision.

In the Middle East and Central Asia, growth is expected to drop sharply to 0.7 percent in 2026 before rebounding to 6.5 percent in 2027. This is a downward revision of 1.2 percentage points for 2026 and an upward revision of 1.9 percentage points for 2027.

Risks to the outlook remain tilted to the downside, the IMF finds, as the possibility of a renewed Middle East conflict looms large and trade fragmentation could accelerate. A possible correction in technology-driven expectations would add to the downside risks.

Policy priorities are restoring price stability, supported by central bank independence and strong financial oversight, the IMF said, urging structural reforms to promote energy security, AI readiness, and domestic rebalancing.