IMF Warns Prolonged Middle East Conflict Could Weaken Global Growth Outlook

The International Monetary Fund raised its 2026 global growth forecast to 3.1% but warned that prolonged Middle East conflict, higher energy prices and shrinking policy buffers could weaken the recovery.

Global growth is projected at 3.4% in 2027, unchanged from the IMF’s July outlook. Global headline inflation is projected at 4.7% in 2026, with risks becoming increasingly uneven across economies.

Energy importers and lower-income countries face greater pressure if disruptions persist. Higher energy and food prices could renew inflation, while rising government borrowing costs further narrow room for policy support.

“The global economy continues to prove resilient, but this resilience is becoming increasingly uneven,” Deniz Igan of the IMF Research Department said.

The October forecast raises the 2026 growth projection by 0.1 percentage point from July. The 2027 projection remains unchanged as the global economy continues along a recovery path, but the IMF said the forces supporting that resilience are weakening. The forecast follows TokenPost’s earlier coverage of the IMF’s growth outlook.

Investment connected to artificial intelligence, including hardware and technology supply chains, is helping offset some of the energy shock in economies exposed to the sector. Favorable terms of trade are also supporting growth in some countries.

That support could prove less durable if energy disruptions continue, inflation returns or AI-related investment slows. Higher government borrowing costs would add another strain to economies already facing heavy debt burdens.

“The margins of adjustment that made global economy resilient to the negative shocks are rapidly narrowing,” Igan said.

The outlook leaves the global economy vulnerable to a wider gap between countries benefiting from technology investment and those facing higher energy costs. The IMF’s warning centers on whether the current supports can continue as conflict-related risks remain elevated.