Growth should rebound to 3.4% in 2027, according to the IMF's July 2026 World Economic Outlook Update, but that is still below the average of 3.5% seen in 2024 and 2025. In April, the IMF had forecast 3.1% growth.
The negative effects of the Middle East conflict are partly offset by accelerated momentum in the global technology cycle thanks to advances in artificial intelligence and its adoption, the IMF said.
The IMF's report warned, however, that the possibility of renewed Middle East conflict looms large and could extend commodity price volatility, further threaten supply chains, raise prices, and weigh on financial conditions.
"A renewed conflict in the region is going to catch the global economy in a worse position than it was the first time," Deniz Igan, who leads the IMF's work on economic updates, said.
The IMF left its 2026 growth forecast for the US economy unchanged at 2.3%. It lowered the 2026 growth forecast for the euro area to 0.9% from its previous forecast of 1.1% in April and raised its forecast for China to 4.6%
Global disinflation trend will continue, though the pace of easing may slow in 2026, the IMF said.
