IMF lowers 2026 global growth forecast due to Middle East risks, despite AI boom
via Punch Nigeria3 min read
The International Monetary Fund IMF has again lowered its 2026 global economic growth projection to 3.0 percent, down from 3.1 percent in its April forecast, citing the ongoing impact of the Middle East conflict. This marks the second reduction this year, with global inflation anticipated to accelerate to 4.7 percent. While an AI boom partially offsets the war's effects, the delayed recovery from the conflict, prolonged disruptions, and higher prices are contributing to a larger economic hit this year. Deniz Igan, division chief at the IMF’s research department, noted that cumulative forecasts for the next two years are broadly unchanged, expecting a "V-shaped recovery" with growth picking up to 3.4 percent in 2027. The IMF highlighted varying impacts, with energy exporters benefiting and technology-led economies experiencing stronger activity, while energy importers with limited tech participation weaken. The conflict has led to soaring global oil prices due to disruptions in the Strait of Hormuz. Although a temporary US-Iran deal paused hostilities, tensions are rising again. The IMF warned of "glaring differences across countries," with retail gasoline costs jumping significantly in emerging Asia. While the US economy is set to expand by 2.3 percent, growth in the Middle East and central Asia was downgraded to 0.7 percent. The euro area's growth is projected at 0.9 percent, and France at 0.6 percent. China's growth projection was slightly adjusted upwards to 4.6 percent. T
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