IMF trims growth forecast

The International Monetary Fund cut its 2026 global growth forecast to 3.1% on April 14, saying the war in the Middle East is slowing the world economy. (imf.org) The Fund said global growth is now expected at 3.1% in 2026 and 3.2% in 2027, down from about 3.4% in 2024 and 2025. It said the 2026 forecast was revised down by 0.2 percentage point from its January update. (imf.org) The IMF’s April forecast is a “reference forecast,” not a normal baseline, because the war began in late February 2026 and the outlook depends on how long the disruption lasts. The Fund assumed the shock would fade by mid-2026, in line with commodity futures prices as of March 10. (imf.org) The mechanism is simple: war pushes up oil, gas and fertilizer prices, which lifts inflation and leaves households, companies and governments with less room to spend. The IMF said the slowdown and price pressures would be “particularly pronounced” in emerging market and developing economies. (imf.org) Asia is still carrying more of the expansion than any other region. The IMF projects emerging and developing Asia to grow 4.4% in 2026, well above the 3.1% global rate, even as higher fuel costs widen trade gaps and squeeze government budgets. (imf.org, imf.org) The Fund said China and India are expected to generate about 70% of Asia’s growth. It also said inflation in emerging Asia is projected to rise to 2.6% in 2026 from 1.4% in 2025. (imf.org) The pressure is heavier in poorer, fuel-importing countries. The IMF said growth in emerging market and developing economies was cut by 0.3 percentage point for 2026 from January, while the forecast for advanced economies was broadly unchanged. (imf.org) That gap shaped the World Bank-IMF Spring Meetings in Washington, which ran from April 13 to 18. The meetings brought together finance ministers and central bankers as officials argued over debt, inflation, poverty and the cost of shielding households from higher food and fuel bills. (worldbank.org, imf.org) After the meetings, Reuters reported that developing-country policymakers were frustrated that repeated external shocks were derailing debt reduction and making affordable food and fuel harder to provide. A separate IMF committee statement said a prolonged conflict could keep fuel and fertilizer prices high and deepen risks to food and energy security. (msn.com, imf.org) The IMF’s downside case is harsher than the headline forecast. If energy prices rise more and stay high longer, it said global growth could slow to 2.5% in 2026 while inflation climbs to 5.4%. (imf.org) For now, the Fund’s central message is that the world economy is still growing, but on a thinner margin. The longer the conflict disrupts energy and trade, the less room governments have to cushion the blow. (imf.org, imf.org)