The International Monetary Fund (IMF) has revised its global growth outlook forecast for 2026 and 2027 in its April 2026 World Economic Outlook report, projecting global growth at 3.1 percent in 2026, down from previous expectations, before a modest recovery to 3.2 percent in 2027. The revision reflects increasing uncertainty driven by the Middle East conflict, alongside ongoing trade tensions and financial market volatility.
Global headline inflation is expected to increase slightly in 2026, largely due to rising energy costs, before declining again in 2027. The combined effect of slower growth and higher inflation is expected to weigh more heavily on emerging and developing economies, where external vulnerabilities remain elevated.
Risks tilt toward lower growth and higher inflation
The IMF noted that the balance of risks has shifted, with downside risks to growth and upside risks to inflation becoming more pronounced. Adverse scenarios involving weaker growth and higher inflation are now more likely compared to earlier forecasts.
Global trade is expected to weaken in the near term due to geopolitical tensions, rising trade barriers, and ongoing supply chain disruptions. Trade fragmentation and tariff increases are identified as key risks that could further dampen economic activity and reduce long-term output.
Advanced economies face uneven recovery
In the United States, growth is projected at 2.3 percent in 2026 and 2.1 percent in 2027, supported by domestic demand and fiscal measures, though trade barriers continue to weigh on activity.
In the euro area, growth is expected to remain subdued at 0.9 percent in 2026 and one percent in 2027, reflecting weak industrial output and sensitivity to energy prices.
The United Kingdom is projected to see growth slow to 0.8 percent in 2026 before recovering to 1.3 percent in 2027. The report attributes the 2026 slowdown to the war and a slower pace of monetary easing, while the 2027 recovery remains slower than expected before the war because the effects of higher energy prices persist.
For Japan, the IMF stated that growth is foreseen at 1.2 percent in 2026, and 1.2 percent in 2027. Japan benefits from stronger growth momentum and offsetting government measures, which help moderate the impact of the Middle East conflict relative to other advanced economies.
Emerging markets show mixed outlook
China’s growth is forecast at 4.4 percent in 2026 and four percent in 2027, supported by policy stimulus but constrained by structural challenges. The 2026 forecast is revised upward relative to October because lower US effective tariff rates on Chinese goods and stimulus measures offset the negative effects of the Middle East conflict. The slowdown in 2027 is attributed to structural headwinds, including a prolonged housing slowdown, a declining labor force, diminishing returns on investment, and weaker productivity growth.
India remains one of the fastest-growing major economies, with growth projected at 6.5 percent in both 2026 and 2027. For 2026, growth is revised upward moderately by 0.3 percentage point, led by positive contributions from the carryover of the strong 2025 outturn and the decline in additional US tariffs on Indian goods from 50 to 10 percent, which outweigh the adverse impact of the Middle East conflict.
Turkey’s growth forecast has been revised downward by 0.8 percentage point to 3.4 percent in 2026, as 2025 growth was weaker than expected and higher oil and gas prices weigh on activity. The IMF’s growth forecast for 2027 has been cut to 3.5 percent from 4.1 percent previously.
Structural risks and global imbalances
Energy prices are expected to rise in the near term due to geopolitical disruptions, contributing to inflation and affecting trade balances. Global financial conditions remain tight, with high interest rates weighing on investment and credit growth, particularly in emerging markets.
Debt vulnerabilities remain elevated, especially in low-income countries, where refinancing risks are significant. Trade tensions and tariff increases continue to pose risks to global output, while persistent current account imbalances reflect underlying structural differences across economies.