The International Monetary Fund (IMF) on Tuesday nudged its 2026 global growth forecast to 3.1%, up 0.1 percentage point from its July projection, as economies lifted by the artificial intelligence (AI) investment boom offset those hurt by the Middle East conflict.
In its latest World Economic Outlook, titled “Resilience Under Strain, Urgent Choices,” the IMF projected global growth slowing from 3.5% in 2025 to 3.1% in 2026 before recovering to 3.4% in 2027. The 2027 figure is unchanged from the July forecast and 0.2 percentage points higher than the April forecast.
The IMF said growth is becoming more concentrated. Just 32 economies now account for 95% of global growth, down from 54 in April. Roughly 47% of economies had their forecasts downgraded.
The fund described the world economy as neither simply slowing nor accelerating but having growth reallocated according to each country’s exposure to the war-driven energy shock and to AI-related demand.
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The strongest performers combine limited energy vulnerability with deep ties to the AI hardware supply chain. By contrast, energy importers with little connection to the technology cycle, including many low-income countries, face the hardest mix of higher import bills, weaker currencies, and falling real incomes.
The IMF’s baseline assumes the Strait of Hormuz reopens in March 2027, with conditions broadly returning to prewar levels by October 2027. Before the war, the strait carried about a quarter of the world’s seaborne oil trade.
The fund estimated that closing the strait would have cut global growth by 0.9 percentage points this year without offsetting supply responses. Rerouted Gulf output, higher production elsewhere, inventory drawdowns, and a lower oil intensity of the world economy reduced the net hit to about 0.3 percentage points.
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Saudi Arabia’s 2026 outlook was cut by 5 percentage points from July to a 3.3% contraction. Meanwhile, Bahrain, Iraq, Kuwait, and Qatar, commodity producers most affected by disruptions to energy output and transport, are expected to shrink by double digits this year.
The IMF warned that inventories are being depleted toward stress levels that could trigger sharp price jumps. Oil prices are assumed to average 95.74 U.S. dollars a barrel in 2026, up about 41% from 2025, and 87.39 dollars in 2027.
Global headline inflation is now forecast to rise from 4.1% in 2025 to 4.7% in 2026 before easing back to 4.1% in 2027.
Compared with its April projections, the fund raised its inflation forecasts by 0.3 percentage points for 2026 and 0.4 percentage points for 2027.
Core inflation is not expected to return to 2% until the end of 2027 in Japan and Britain and mid-2028 in the euro area and United States.
Among major economies, U.S. growth is forecast at 2.3% in both 2026 and 2027, supported by consumption, fiscal policy, and technology investment. The euro area is seen growing 1.1% this year and 1.2% next, reflecting the continued drag of high energy prices and weak consumer confidence.
India’s growth is projected at 7.0% in both years. Japan is forecast at 0.7% and Britain at 1.3% for 2026.
- The IMF raised its 2026 global growth forecast to 3.1%, up 0.1 percentage point from its July projection.
- Growth is becoming more concentrated, with 32 economies accounting for 95% of global growth, down from 54 in April.
- The IMF expects the Strait of Hormuz to reopen in March 2027 and conditions to return to prewar levels by October 2027.
- Saudi Arabia's 2026 outlook was cut by 5 percentage points to a 3.3% contraction, while Bahrain, Iraq, Kuwait, and Qatar are expected to shrink by double digits this year.
- Global headline inflation is forecast to rise from 4.1% in 2025 to 4.7% in 2026 before dipping back to 4.1% in 2027.
