The IMF has warned that the global economy is approaching the limits of its ability to withstand further disruption, with emergency oil stocks running low and government budgets overstretched across major economies.
In its latest World Economic Outlook, released in Bangkok, the Fund said global growth had held up better than expected over the past six months despite the ongoing US-Iran conflict. Rerouting of oil supplies away from the Strait of Hormuz and large-scale releases of strategic energy reserves helped contain the impact on prices. But those reserves are now depleted. The US strategic petroleum reserve recently fell to its lowest level since 1982.
The IMF revised its global growth forecast for 2026 marginally upward to 3.1%, from 3% in July. The 2027 forecast remains at 3.4%. US growth stays at 2.3% for this year, while the UK forecast was raised to 1.3%. However, the Fund warned that prolonged high oil prices and rising interest rates would weigh on growth next year.
Global inflation is expected to hold at 4.7% this year and ease to 4.1% in 2027 — slightly higher than previously forecast. The Fund urged central banks not to overreact to short-term price spikes but to move quickly if inflation shows signs of becoming entrenched.
The IMF flagged several downside risks: a prolonged stalemate or escalation in the Middle East, disruptions to energy infrastructure, cyberattacks, extreme weather events, and an AI-driven market crash. Its message to governments was blunt — stop coping and start rebuilding fiscal and energy buffers before the next shock hits.
Source: The Guardian
