IMF warns global economy ‘could soon test the limits of resilience’
World Economic Outlook says states’ oil stocks are low and budgets are overstretched, as it upgrades UK GDP growth forecast for 2026
TL;DR
- Global economy nearing its resilience limits due to low emergency oil stocks and strained government budgets.
- Strategic energy releases and rerouted supplies initially contained Middle East conflict's impact on oil prices.
- Depleted emergency stocks and high debt leave governments with little capacity to shield consumers from future price jumps.
- IMF revised global growth forecast up to 3.1% for this year and maintains 3.4% for next year.
- US growth forecast unchanged at 2.3% for this year, revised up to 2.3% for 2027.
- UK GDP growth forecast for this year is 1.3%, but cut to 1.2% for next year due to high energy prices and interest rates.
- Downside risks are significant, particularly from prolonged Middle East conflict, further energy disruptions, cyber-attacks, or extreme weather.
- Global inflation expected to remain at 4.7% this year, declining to 4.1% in 2027.
- Central banks urged to be agile in responding to inflation, not overreacting to short-term jumps.
- AI-driven market crash identified as a continuing risk to the global economy.