IMF raises 2026 global growth forecast to 3.1% but warns of a split outlook

Left · 1The International Monetary Fund raised its 2026 global growth forecast by 0.1 percentage points to 3.1% in its World Economic Outlook, released on 13 October 2026 at its Annual Meetings in Bangkok. The Hindu reported this as slower growth than the 3.5% recorded in 2025. 1 Centre · 2Gulf News gave the report's title as "Resilience Under Strain, Urgent Choices" and dated the IMF's warning 12 October, while Anadolu Agency, The Hindu and The Guardian dated the release Tuesday 13 October. Anadolu described the headline global forecast as kept stable, and also gave 3.4% growth for 2027, unchanged from the earlier estimate. 2 3 Left · 1The Fund said growth would slow less than previously expected because of the resilience of advanced economies in the face of war-fuelled energy prices. It warned that low-income countries remained vulnerable to the supply shock. 1

Left · 1The IMF described a "bifurcated outlook" and a "fragmented" world economy, shaped by the US-launched war on Iran and an AI technology boom. Energy-importing countries not exposed to the AI boom are the most vulnerable. The Hindu reported that refined petroleum product prices remain 70–95% above pre-war levels. 1 Left · 2Silvana Tenreyro, the IMF's chief economist, said the global economy had been resilient but that "that resilience is under strain, with risks tilted to the downside". The Guardian reported the IMF's warning that the economy "could soon test the limits of resilience". 1 4 Left · 1Regional forecasts diverged. The Middle East and Central Asia are expected to contract by 0.3% in 2026, and Saudi Arabia's economy is projected to shrink 3.3%, a 5.0-point cut. Advanced economies are forecast to grow 2.1%, with AI supply-chain economies such as Taiwan and South Korea doing significantly better. China is expected to slow because of weak domestic demand, and global inflation is set to accelerate to 4.7% in 2026. 1

Centre · 1Anadolu Agency said about 47% of economies saw growth forecasts downgraded compared with April. It said the Middle East and Central Asia forecast fell 2.2 points, which the IMF attributed to the war in the region and a longer-than-expected closure of the Strait of Hormuz. Bahrain, Iraq, Kuwait and Qatar were projected to see double-digit contractions in 2026, and China's 2026 forecast was cut to 4.5%. 3 Centre · 2Gulf News listed further country figures: euro area growth of 1.1% in 2026 and 1.2% in 2027, Japan 0.7%, Canada 1.1%, emerging and developing economies 3.7%, and India 7% on a fiscal-year basis. It said the UAE economy is projected to contract 3.9% in 2026 and rebound 7.7% in 2027, conditional on shipping routes normalising and the Strait of Hormuz reopening. It gave inflation as easing to 4.1% in 2027. Gulf News put US growth at 2.3% for 2026, while Anadolu put it at 2.1%. 2 3 Left · 1The IMF said risks include a prolonged war reviving inflation and straining fiscal positions. It also said the technology tailwind "could stop abruptly" if expectations about AI profits and productivity gains are reassessed. 1

Left · 1On policy, Tenreyro urged temporary, targeted support measures, said monetary policy should stay "firmly focused on price stability", and called for restoring fiscal space. The Fund also called on governments to cut spending and manage borrowing, which The Hindu noted is difficult for developing countries hit by the war shock. 1 Centre · 1Gulf News also reported that the IMF urged fiscal restraint to contain demand pressures and advised central banks to keep policy sufficiently restrictive to prevent second-round inflation effects. It said economies had absorbed the energy shock partly by drawing down oil reserves and redirecting supplies, options that are finite. 2 Left · 1For the UK, the IMF raised its 2026 growth forecast to 1.3%, up 0.3 points from July. It cut its 2027 forecast modestly to 1.2% from 1.3%, saying growth would "edge down" as higher energy prices and long-term interest rates weigh on consumption and investment. 4

Left · 1Tenreyro told the UK chancellor, John Healey, to "stay the course" in repairing the public finances, saying the UK "stands out" among G7 countries in having a plan to narrow its deficit. Healey's first budget is due on 28 October, and he is under pressure to announce an energy support package. The IMF advises against across-the-board subsidies. 4 Left · 1Healey said the UK economy was "showing strong international resilience" despite conflict in the Middle East and Europe. Bank of England policymaker Megan Greene argued the upgrade showed UK interest rates should be higher. The Bank's rate-setting committee is widely expected to raise rates in November. 4 Left · 1The IMF expects UK average inflation of 3.3% this year and 2.8% in 2027, and singled out the UK and Japan as places where core inflation will not return to 2% until late next year. Separately, the Institute for Fiscal Studies warned the budget would be a "work of fiction" unless Healey explained how he would handle £35bn of future spending pressures. 4