IMF Keeps 2026 Growth Forecast Largely Unchanged

The IMF raised its 2026 global growth forecast by 0.1 percentage points to 3.1%, with growth projected to rebound to 3.4% in 2027, according to its October 2026 World Economic Outlook. Resilient advanced economies and increased AI investment underpin the upgrade, although growth is expected to slow from 3.5% in 2025 as high energy prices linked to the US–Iran war pose significant risks, particularly for low-income countries and energy-importing economies. US growth is forecast at 2.3% in both 2026 and 2027, while China’s expansion is expected to slow to 4.5% and 4.0%, respectively, largely due to weak domestic demand. Japan’s economy is forecast to expand by 0.7% in both years, while India is projected to grow by 7.0% annually over the same period. Eurozone growth is expected to ease to 1.1% this year before recovering to 1.2% in 2027, amid high energy costs and weak consumer confidence. The UK’s 2026 forecast was raised to 1.3%, while its 2027 outlook was lowered to 1.2%.

The IMF kept its 2026 global growth forecast virtually unchanged at 3%, just 0.1 percentage point below its April projection, citing the world economy’s stronger-than-expected resilience to the Iran war and robust AI-related investment, according to its July 2026 World Economic Outlook. The 2027 growth outlook was revised upward to 3.4% from 3.2%. Despite the slight upgrades, the IMF warned that risks remain tilted to the downside, and the full economic impact of elevated tensions, including renewed US-Iran strikes, may still take time to materialize. Global headline inflation is now expected to reach 4.7% in 2026, up from 4.1% in 2025, before easing to 3.9% in 2027. The IMF projects growth of 2.3% for the US in 2026 and 2.2% in 2027, while China is expected to expand by 4.6% and 4.1%, respectively. India’s growth is forecast at 6.4% in 2026 and 6.7% in 2027, Japan at 0.6% and 0.7%, the Eurozone at 0.9% and 1.2%, and the UK at 1.0% and 1.3%.

The OECD lowered its global growth forecasts for this year to 2.8% from 3.4%, while keeping the projection for 2027 steady at 3.1%. The agency noted that the duration and extent of the conflict in the Middle East remain uncertain, but the economic effects are likely to be felt for some time given the months it will take to restore damaged infrastructure and transport routes and deliver products around the world. Growth is set to slow modestly in North America and Europe before a tentative recovery, with the US easing to 2% in 2026 and 1.8% in 2027, Canada dipping to 1.2% before rebounding to 1.7%, Mexico strengthening to 1.9% by 2027, the UK from 0.9% to 1.1%, while China moderates steadily to 4.5% in 2026 and 4.3% in 2027. In addition, the OECD noted that higher energy prices, supply shortages, tighter financial conditions and weaker confidence would weigh on activity worldwide. Inflation would also intensify, rising by around 0.4 pp in 2026 and 1.3 pp in 2027.