IMF trims global growth
- The IMF cut its global growth forecast to 3.1% for 2026 and 3.2% for 2027. - Emerging economies face stickier inflation and weaker prospects, with Asia especially exposed to trade and supply shocks. - Officials warned repeated shocks — trade disruption, war risk and tighter finance — are dragging growth in poorer countries. (downtoearth.org.in)
The International Monetary Fund cut its 2026 global growth forecast to 3.1%, saying a new energy shock from the Middle East war is slowing the world economy. (imf.org) In its April 14 World Economic Outlook, the Fund left 2027 growth at 3.2% and said output in 2024 and 2025 had been running near 3.4%. It called the 2026 downgrade a 0.2 percentage point cut from its January update. (imf.org) The Fund said the world economy is now growing below its 2000-2019 average of 3.7%. Its baseline assumes the conflict does not trigger a larger, longer energy supply disruption. (imf.org) For emerging market and developing economies, the IMF cut its 2026 forecast to 3.9% from 4.2% in January. Reuters reported the Fund tied the downgrade to higher energy and food costs and to uncertainty hitting more vulnerable, commodity-importing countries. (usnews.com) Asia got a separate warning from the Fund on April 16. Krishna Srinivasan, who leads the IMF’s Asia and Pacific Department, said the region’s resilience is being tested by the war in the Middle East and the energy shock that followed. (imf.org) That matters because many Asian economies import energy, depend on trade, and sit inside supply chains that are sensitive to shipping costs and factory disruptions. The IMF said renewed inflation pressure could force central banks to keep policy tighter for longer. (imf.org) The Fund’s financial stability report added another risk: tighter global financing conditions. It said cross-border portfolio flows to emerging markets can reverse quickly when investors turn more risk-averse. (imf.org) At the International Monetary and Financial Committee meeting on April 17, the chair’s statement said repeated shocks from wars and conflicts were hitting the poorest and most vulnerable countries the hardest. It also said governments now have less policy space than they did before the pandemic and Russia’s 2022 invasion of Ukraine. (imf.org) The IMF’s downside scenario is much weaker than its baseline. In a blog published with the forecast, IMF economists said global growth could fall to 2% in 2026 and 2027 if energy supply dislocations last into next year, inflation expectations rise, and financial conditions tighten sharply. (imf.org) The Spring Meetings in Washington ran from April 13 to April 18, with finance ministers and central bankers debating how to handle slower growth, higher inflation risk and tighter budgets at the same time. The IMF’s message was that the world economy is still expanding, but with less room for another shock. (meetings.imf.org)
