Global growth slows, but some bright spots emerge amid uncertainty

AFP | Washington

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The IMF cut its 2026 global growth projection again yesterday, flagging “uncertainty and risks” to the economic outlook as fighting reignited in the Middle East.

Global economic growth is estimated at 3.0% this year, said the International Monetary Fund, down from 3.1% in its April forecast.

The projection, in its World Economic Outlook update, was made before renewed exchanges of fire between the United States and Iran in recent hours.

“Developments overnight illustrate the uncertainty and risks that surround the outlook,” said Petya Koeva Brooks, deputy director at the IMF’s research department.

“We’re going to be monitoring developments very closely,” she told reporters.

It is the second time this year that the fund has lowered its overall growth expectations. The growth rate marks a cooling from 2025 as well.

Global inflation is anticipated to accelerate to 4.7% this year, higher than earlier projected.

Koeva Brooks expects normalization from the war to gradually unfold over three quarters of a year, although shocks that lead to higher oil prices and inflation expectations could take further tolls on the global economy.

For now, the overall growth downgrade is modest, as momentum in artificial intelligence driven by demand partially offsets the war’s effects.

The IMF expects global growth to pick up in 2027 to 3.4%.

Deniz Igan, division chief at the IMF’s research department, describes the bounceback as “a V-shaped recovery.”