Dubai, UAE – Oct. 2026 – The International Monetary Fund raised its forecast for global economic growth in 2026 by 0.1 percentage point to 3.1 percent, saying the world economy has held up against higher energy costs and other shocks.
In its latest World Economic Outlook, the Fund left its 2027 growth forecast unchanged at 3.4 percent. The report, titled “Resilience Under Strain, Urgent Choices,” compares the new numbers with the IMF’s July update. Against its April projections, the 2026 figure is unchanged and the 2027 figure is 0.2 points higher.
Global growth is expected to slow from 3.5 percent in 2025. The IMF said activity in the first half of 2026 was stronger than expected despite the war in the Middle East and trade tensions. It credited two main cushions.
One was the rerouting of energy supplies, drawdowns of inventories, and a shift to other energy sources. The other was a boom in artificial intelligence investment that supported demand and trade.
The Fund projected global headline inflation at 4.7 percent in 2026, easing to 4.1 percent in 2027. It attributed the rise mainly to higher energy and food prices and expects only limited pass-through to core inflation.
The stable global figure hides a divided picture. Countries with limited exposure to the war and strong links to the technology supply chain are holding up or strengthening, the report said.
Energy importers outside that chain, including many low-income countries, face higher import bills, weaker real incomes and tighter fiscal room. The IMF said 32 economies now account for 95 percent of global growth, down from 54 in April.
Among major economies, the Fund projected US growth at 2.3 percent in both 2026 and 2027, and China at 4.5 percent in 2026 slowing to 4.0 percent in 2027. India is forecast at 7.0 percent in both years on a fiscal-year basis.
The euro area is projected at 1.1 percent in 2026. The Middle East and Central Asia region is forecast to contract by 0.3 percent this year before rebounding by 6.3 percent in 2027.
The IMF said risks are tilted to the downside. A prolonged stalemate or escalation in the Middle East could keep energy and food prices high and volatile. A reassessment of AI profitability could also trigger a sharp fall in investment and tighter financial conditions.
Silvana Tenreyro, the IMF’s economic counsellor, wrote in the foreword that the global economy’s resilience “is under strain.” She called for rebuilding fiscal buffers and strengthening supply chains and energy security.
The report urged governments to adopt credible plans to reduce deficits and keep any support for households temporary and targeted. It says central banks should stay focused on price stability.
