IMF trims 2026 growth forecast

The International Monetary Fund cut its 2026 global growth forecast on April 14, lowering its call to 3.1% as war-driven energy shocks darken the outlook. (imf.org) In its April 2026 World Economic Outlook, the fund also raised its 2026 inflation estimate to 4.4% from 4.2% in January and said 2027 growth would be 3.2%. The report assumed a “limited conflict” in the Middle East rather than a wider disruption. (imf.org) Reuters reported the downgrade came after oil-price spikes and supply disruptions tied to the Iran war. The fund said the global economy was already drifting toward a more adverse scenario as shipping through the Strait of Hormuz remained at risk. (reuters.com) The International Monetary Fund’s forecast is one of the benchmarks governments and central banks use when they set budgets, borrowing plans and interest-rate expectations. A lower growth number and a higher inflation number point to a harder mix: slower activity with prices still rising too fast. (imf.org) That mix is already shaping central-bank thinking in the United States. Chicago Federal Reserve President Austan Goolsbee said on April 14 that rate cuts may need to wait until 2027 if high oil prices keep inflation from moving back to the Federal Reserve’s 2% target. (reuters.com) Goolsbee said he had previously thought tariff-driven inflation would ease this year and allow “even multiple” rate cuts in 2026. At the Semafor World Economy conference, he said persistent energy inflation could push that timeline out of 2026. (reuters.com) The International Monetary Fund also laid out harsher scenarios if the war widens. Reuters reported its worst case would leave the world economy near recession, with oil averaging $110 a barrel in 2026 and $125 in 2027. (reuters.com) The fund is releasing the forecast as finance ministers and central bankers gather for the International Monetary Fund and World Bank spring meetings in Washington this week. Those meetings now open with growth marked down, inflation marked up and fewer expectations of quick rate relief. (imf.org)