Global Economic Growth To Decelerate To 3.1 Per Cent In 2026 Before Rebounding In 2027, Says IMF

KUALA LUMPUR, Oct 13 – Global economic growth is projected to slow to 3.1 per cent in 2026 from 3.5 per cent in 2025 before recovering to 3.4 per cent in 2027, according to the International Monetary Fund (IMF).

In its October 2026 World Economic Outlook (WEO) report released on Tuesday, October 13, 2026, the IMF noted that global growth is undergoing a structural reallocation across economies based on their relative exposure to war-induced supply shocks and artificial intelligence (AI)-driven demand momentum.

The fund highlighted that geopolitical and policy uncertainties are expected to remain elevated throughout 2027.

Regional Growth, Energy Forecasts, Inflation Trends, and Tech Cycles

The IMF outlined several core economic baseline assumptions and sectoral projections:

• Strait of Hormuz Reopening Assumption: The IMF assumes that shipping through the Strait of Hormuz will begin reopening in March 2027, with a return to pre-war operating conditions expected by October 2027, signifying a gradual restoration of energy production, transit, insurance, and settlement systems.
• Elevated Energy Prices: Average petroleum spot prices are projected at US$96 per barrel in 2026—16 per cent higher than April 2026 baseline estimates. Natural gas prices (Title Transfer Facility futures) are forecasted at US$20 per million British thermal units, approximately 36 per cent above earlier projections.
• Global Inflation Path: Global headline inflation is expected to tick up to 4.7 per cent in 2026 from 4.1 per cent in 2025, before moderating back to 4.1 per cent in 2027.
• Emerging Markets & Developing Economies: Growth across emerging market and developing economies is projected to ease to 3.7 per cent in 2026 from 4.5 per cent in 2025, before rebounding to 4.4 per cent in 2027.
• Southeast Asian Tech Momentum: Several Southeast Asian economies are positioned to benefit from expanding data centre investments, global technology value chain upturns, and targeted domestic fiscal support.
• AI & Fiscal Tightening: The global technology cycle driven by AI adoption is expected to stabilize with steady productivity gains, while fiscal stances across developing economies undergo gradual tightening.

The IMF stressed that economic outcomes across developing nations will remain heterogeneous depending on commodity dependence, financial conditions, and direct geographic exposure to West Asian conflicts.

–NMT