Global growth outlook slips
International institutions are preparing to lower growth forecasts and raise inflation estimates as the Middle East war spreads through energy and trade channels. Officials at the IMF and World Bank signalled that the shock could cascade across transport, prices and emerging-market stability, while the ADB has already cut Asia‑Pacific growth to 5.1%. (reuters.com) (en.tempo.co)
Finance ministers gathering in Washington this week are arriving to a darker global outlook, with the International Monetary Fund and World Bank preparing lower growth forecasts and higher inflation estimates. (usnews.com) Reuters reported on April 12 that both institutions had expected to lift their forecasts before the war broke out on February 28, but now say higher energy costs and supply disruptions will hit emerging markets and developing economies hardest. (usnews.com) The World Bank’s baseline now puts 2026 growth in emerging markets and developing economies at 3.65%, down from 4.0% in October, and says a longer war could drag that figure to 2.6%. Its inflation estimate for those economies has risen to 4.9% from 3.0%, with a worst-case scenario of 6.7%. (usnews.com) The Asian Development Bank has already moved. On April 10, it cut developing Asia and the Pacific to 5.1% growth in both 2026 and 2027, down from 5.4% last year, and raised its 2026 inflation forecast to 3.6%. (adb.org) The basic mechanism is energy first, then everything built on energy. The International Monetary Fund said higher oil and gas costs are feeding into transport, factory inputs and consumer prices, while tighter financial conditions are raising borrowing costs. (imf.org) The Strait of Hormuz sits at the center of that chain. The International Monetary Fund said about 25% to 30% of global oil and 20% of liquefied natural gas move through the waterway, so disruption there quickly reaches Asia, Europe and oil-importing countries in Africa. (imf.org) The World Bank said on April 8 that the conflict had already weakened the 2026 outlook for the Middle East, North Africa, Afghanistan and Pakistan region after market disruption, financial volatility and damage to energy and public infrastructure. Excluding Iran, it now expects regional growth to slow from 4.0% in 2025 to 1.8% in 2026. (worldbank.org) Poorer importers face the sharpest squeeze because they buy fuel in dollars, import food and fertilizer, and often carry heavy debt. Reuters reported that the International Monetary Fund expects demand for near-term emergency support from low-income and energy-importing countries to reach $20 billion to $50 billion. (fidelity.com) The food risk is rising alongside the fuel risk. Reuters reported that the International Monetary Fund warned about 45 million additional people could face acute food insecurity if the war keeps disrupting fertilizer shipments. (usnews.com) The next marker comes on April 14, when the International Monetary Fund publishes its World Economic Outlook at the spring meetings. By then, the broad picture is already set: slower growth, stickier inflation and less room for vulnerable countries to absorb another shock. (imf.org)
