IMF forecasts 3.1% global growth in 2026, says economic resilience under strain

The International Monetary Fund on Tuesday said global growth is projected at 3.1 per cent in 2026 and 3.4 per cent in 2027, unchanged for 2026 and revised moderately upward for 2027, relative to the projections in the April 2026 World Economic Outlook (WEO).

The projections are contained in the IMF’s 2026 World Economic Outlook titled “Resilience Under Strain, Urgent Choices,” presented on the sidelines of the IMF/World Bank meetings holding in Bangkok, Thailand.

The report said global headline inflation is projected to increase to 4.7 per cent in 2026 before easing to 4.1 per cent in 2027, marking a cumulative upward revision of 0.7 percentage points, with the temporary increase driven mainly by energy and food prices.

“The global economy is again proving resilient, but unevenly so and with rapidly narrowing margins of adjustment in the near term,” the report added.

“Activity in the first half of 2026 held up better than expected despite the dragging war in the Middle East and continuing strains from trade tensions. The technology cycle has provided a demand impulse, driven by strong investment in artificial intelligence (AI). The interaction of these forces—geopolitics and technology—has produced a split global economy: Favourable terms of trade or technology-related exports and investment give some countries a cushion, whereas others face higher import bills and weaker demand. Use of buffers and adaptability have helped economies weather the negative shocks so far.”

IMF said flexible supply responses, rerouting shipments, inventory drawdowns, fiscal support measures, and lower energy intensity than in previous decades have helped contain the war’s hit to activity.

It added that private firms have continued to adjust to repeated shocks, including geopolitical risk and shifts in trade policy. At the same time, financial markets have maintained a broadly benign view of the challenges, also buoyed by exuberance in the technology segment.

But these margins of adjustment are not unlimited, the report said, adding that inventories have been drawn down, commodity markets remain vulnerable, fragmentation could become a greater drag on efficiency, and prolonged uncertainty could eventually weigh more heavily on confidence.

The report said energy constraints could impair the AI-led impetus, and financing conditions could change abruptly for any number of reasons, including fiscal sustainability concerns.