The International Monetary Fund (IMF) has warned that the global economy could face tougher times ahead as the ongoing war in the Middle East, rising energy prices, and trade tensions threaten economic growth.

According to the Fund, the global economy has performed better than expected in 2026, but many countries are running out of options to protect themselves against further economic shocks.

In its latest World Economic Outlook report, the IMF projected global economic growth of 3.1% in 2026, rising to 3.4% in 2027.

However, the Fund warned that the outlook remains uncertain, with poorer countries particularly exposed to higher import costs, rising prices and weaker demand.

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“Global growth is projected at 3.1 percent in 2026 and 3.4 percent in 2027,” the IMF stated.

The Fund explained that strong investment in artificial intelligence (AI) has helped support economic activity, particularly in countries benefiting from technology-related businesses and exports.

However, countries that depend heavily on imported fuel and have limited exposure to the technology sector are facing greater economic pressure.

The IMF said businesses and governments had so far managed the effects of the conflict in the Middle East through alternative supply routes, existing stockpiles and financial support measures.

However, it cautioned that these measures could not be sustained indefinitely, particularly if the conflict escalated or energy supplies faced further disruptions.

The Fund also projected global inflation to reach 4.7% in 2026 before easing to 4.1% in 2027, largely reflecting the impact of higher energy and food prices.

It warned that further increases in fuel and food prices could put additional pressure on households, businesses and government finances.

The IMF said global trade was expected to slow in 2026 as higher trade taxes and changes in the production and transportation of goods across countries affected businesses.

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It warned that although the global economy remained relatively resilient, a prolonged war in the Middle East or sudden financial disruptions could slow growth and worsen economic conditions, particularly in developing countries.

DR/MA

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