IMF: Global growth to ease to 3% as conflict and energy prices cloud outlook
WASHINGTON DC: In its latest update published on Wednesday (July 8), the International Monetary Fund (IMF) downgraded its global economic outlook, saying it expects the global growth forecast to slow to 3.0% for this year.
Global inflation, meanwhile, is expected to rise to 4.7%.
IMF warned that the war in the Middle East, which began on Feb 28 when the United States and Israel started bombing Iran, resulted in a disruption in the supply of energy, causing an increase in oil prices across the globe.
“The outlook is uneven: The war shock is weighing on energy importers and vulnerable economies, while AI-driven demand is lifting countries integrated into the global technology value chain.
Global disinflation has stalled. Risks are more balanced than in April, but downside risks from renewed conflict and financial market repricing persist. Policymakers should preserve price stability, rebuild fiscal space, and strengthen adaptability,” the IMF report reads.
For comparison’s sake, global growth was at 3.5% in 2025. In 2027, it’s expected to be at 3.4%. Inflation in 2025, meanwhile, was 4.1%. This year’s rise in inflation will be due to higher commodity and energy prices.
Nevertheless, the IMF said that the global economy has been more resilient than expected, in large part due to the continued investment in Artificial Intelligence, as well as the increase in the use of renewable energy, which has also served to reduce dependence on oil.
The oil-producing economies in the Middle East are expected to experience the worst economic effects stemming from the conflict in the region.
Among key world economies, the US has shown to be relatively resilient. The country’s growth remains stable at 2.3%, helped in large part by oil exports and investments in technology. China’s growth, meanwhile, is expected to decrease from 5.0% to 4.6%.
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IMF also said that the global economic outlook is still highly uncertain due to renewed clashes in the Middle East, including recent attacks on oil tankers and the announcement from the US that it will reinstate sanctions on oil from Iran. /TISG
Senior Writer