IMF lowers global economic growth outlook for 2026

Logo of International Monetary Fund (IMF)

The International Monetary Fund (IMF) lowered its global economic growth forecast for 2026, amid the escalating Middle East tensions, increasing inflationary pressures, and rising geopolitical uncertainty.

In its report released Tuesday, the fund anticipated the global economy to grow by 3.1% in 2026, a decrease of 0.2% from its previous estimate.

It explained that the global economy, which showed relative resilience in the face of trade tensions last year, faces a new test amid the ongoing Middle East conflict, forecasting growth of 3.2% in 2027.

The report outlined three potential trajectories for the global economy, depending on the current tensions’ evolution. Under a prolonged conflict scenario where oil prices remain near $100, growth could slow to 2.5% in 2026. In a worst-case scenario involving further escalation, growth may drop to 2%, with global inflation potentially topping 6%—a significant jump from the 4.4% projected in the baseline scenario, driven by rising energy costs.

Regarding the US, the IMF trimmed its 2026 growth estimate to 2.3% from the 2.4% projection in January. However, it slightly raised its outlook for 2027 to 2.1%, up from its previous reading of 2%.