Financial News: IMF Raises Global Growth Outlook Despite Geopolitical Tens

IMF Raises Global Growth Outlook Despite Geopolitical Tensions

(RTTNews) - The International Monetary Fund upgraded its global growth outlook despite concerns over a more persistent energy market disruption than anticipated due to tensions in the Middle East.

In the World Economic Outlook, released Tuesday, the IMF lifted its global growth outlook for this year to 3.1 percent from 3.0 percent estimated in July. But this was weaker than the 3.5 percent growth in 2025.

Nonetheless, the global growth was projected to improve to 3.4 percent in 2027, which was unchanged from the July report.

The lender cautioned that further escalation in the Middle East, reassessment of AI-related profitability prospects, renewed trade tensions and fiscal vulnerabilities could weaken growth.

The global economy has been resilient, but that resilience is reaching its limits, IMF Chief Economist Silvana Tenreyro told reporters. The IMF published the WEO at its Annual Meetings in Bangkok.

As borrowing costs increased sharply in major advanced economies, the lender called for strong and deliberate fiscal adjustments.

Global headline inflation was expected to rise notably to 4.7 percent this year due to higher commodity prices, before easing to 4.1 percent in 2027.

The inflation estimate for this year was left unchanged, while the projection for next year was revised up from 3.9 percent. However, the pass-through effect to core inflation was expected to be limited.

The global economy withstood latest shocks as the rerouting of energy supplies together with increased energy production cushioned the impact on energy markets, and the investment boom triggered by artificial intelligence provided impetus to growth and international trade.

Further, the world trade volume growth was projected to slow this year and stabilize in 2027, reflecting the drag from tariffs, adjustment in production chains, and continued strength in technology-related trade.

In the United States, GDP growth was projected at 2.3 percent for both 2026 and 2027, unchanged from April for this year and an upward revision of 0.2 percentage point for the next year.

Eurozone growth was estimated at 1.1 percent this year and 1.2 percent in 2027. The forecast was unchanged from the April report for both years.

China's 2026 growth was projected to slow to 4.5 percent, as higher oil prices, together with protracted uncertainty and structural headwinds are expected to weigh on activity. Nonetheless, policy support would prevent a sharper slowdown, the IMF said. Growth is seen at 4.0 percent next year.

India remains among the fastest-growing major economies, with growth projected at 7.0 percent in 2026 and 2027, the IMF said.

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