IMF Predicts Global Economic Growth to Slow to 3.1% in 2026

The forecast for 2026 remains unchanged from the IMF's April predictions, while the outlook for 2027 has been raised by 0.2 percentage points. Despite the global economy showing resilience amid geopolitical conflicts and trade tensions, the IMF cautions that economic and policy buffers are diminishing.

For advanced economies, growth is anticipated to be 2.1 percent in 2026 before declining to 1.8 percent in 2027. In contrast, emerging and developing economies are projected to grow by 3.7 percent in 2026, down from 4.5 percent in 2025, with a recovery to 4.4 percent in 2027.

The US economy is expected to remain stable at a growth rate of 2.3 percent for both 2026 and 2027, supported by strong consumer spending, fiscal policies, and ongoing investments in technologies like artificial intelligence. Inflation in the US is forecasted to rise from 2.7 percent in 2025 to 3.6 percent in 2026, easing to 2.8 percent in 2027.

In the EU, economic growth is projected at 1.4 percent for both 2026 and 2027, slightly down from 1.5 percent in 2025. The euro area is expected to see growth slow from 1.2 percent in 2025 to 1.1 percent in 2026, recovering to 1.2 percent in 2027, amid high energy prices and low consumer confidence. Euro area inflation is anticipated to increase to 3.1 percent in 2026, up from 2.1 percent in 2025, before declining to 2.8 percent in 2027.

China's economic growth is expected to fall from 5 percent in 2025 to 4.5 percent in 2026 and further to 4 percent in 2027, impacted by rising energy prices and structural challenges. Chinese inflation is projected to increase from 0 percent in 2025 to 1 percent in 2026 and 1.4 percent in 2027.

India, however, is set to remain one of the fastest-growing major economies, with growth expected at 7 percent for both fiscal years 2026 and 2027, driven by strong domestic demand. On a calendar-year basis, India's growth is anticipated to be 7.4 percent in 2026 and 7 percent in 2027, with inflation rising from 2 percent in 2025 to 5 percent in 2026, then easing to 4.4 percent in 2027.

Turkey’s growth is forecasted to decline from 3.7 percent in 2025 to 2.7 percent in 2026, recovering to 3.6 percent in 2027. Consumer price inflation in Turkey is expected to decrease from 34.9 percent in 2025 to 31.2 percent in 2026, reaching 26.5 percent in 2027.

The IMF anticipates global inflation will rise from 4.1 percent in 2025 to 4.7 percent in 2026, mainly due to higher energy and food prices, before dropping back to 4.1 percent in 2027. The report assumes an average oil price of $95.74 per barrel in 2026, a 41.3 percent increase from $67.74 in 2025, with a decline to $87.39 in 2027. Nonfuel commodity prices are projected to increase by 17.3 percent in 2026.

Global trade volume is expected to grow by 4.6 percent in 2026 and 4.7 percent in 2027, buoyed by technology-related trade despite existing tariffs and adjustments in international supply chains. The IMF warns that further energy supply disruptions, ongoing conflicts, renewed trade tensions, significant public debt, and stringent global financing conditions could hamper economic activity. It also noted the risks related to concentrated investments in AI industries, suggesting that shifts in expected returns could lead to market corrections and a decline in investment. The IMF recommends enhancing economic resilience through credible fiscal adjustments, price-stable monetary policies, and diversifying energy supplies and trade relationships.