NEW YORK -- The International Monetary Fund (IMF) has lowered its global economic growth forecasts for 2026 to 3.1 percent in the World Economic Outlook (WEO) report published on Tuesday, while keeping its projection for 2027 at 3.2 percent.

This marks a deceleration from the estimated 3.4 percent growth achieved in 2025. Before the outbreak of the Middle East conflict, the bottom-up forecasts for global growth would have been 3.4 percent in 2026 and 3.2 percent in 2027.

Given the difficulty of making real-time projections based on a consistent set of assumptions amid the conflict, this edition of the report presents a "reference forecast" instead of the traditional baseline. The forecast incorporates the impact of the war and assumes that it will be limited in duration, intensity and scope, with disruptions fading by mid-2026.

Under the reference forecast, global headline inflation is expected to increase to 4.4 percent in 2026 and decline to 3.7 percent in 2027.

Specifically, the report projects energy commodity prices to rise by 19 percent in 2026, including a 21.4 percent increase in oil prices due to disruptions to production and transportation in the Middle East. Food prices are also expected to rise more than projected in the October 2025 WEO, reflecting higher energy and fertilizer prices, disrupted shipping routes, and increased transport costs.

World trade volume growth is expected to decline from 5.1 percent in 2025 to 2.8 percent in 2026 and rebound to 3.8 percent in 2027.

Lower-income net energy-importing economies will be hit hard by higher energy and food prices as well as foreign exchange depreciation, with cumulative growth over 2026-2027 revised downward by 0.5 percentage point relative to the January 2026 WEO Update.

The 2026 growth forecast for emerging market and developing economies is revised down by 0.3 percentage point, while the outlook for advanced economies remains broadly unchanged.

To be specific, the US economy is projected to grow by 2.3 percent in 2026 and 2.1 percent in 2027, although higher trade barriers introduced since April 2025 are expected to continue to weigh on activity.

In the euro area, growth is projected to decline from 1.4 percent in 2025 to 1.1 percent in 2026 before edging up to 1.2 percent in 2027. The forecasts for 2026 and 2027 are each 0.2 percentage point lower than those compared in the January 2026 WEO Update.

Growth in emerging and developing economies in Asia is expected to decline from 5.5 percent in 2025 to 4.9 percent in 2026 and to 4.8 percent in 2027.

However, the report raises its 2026 growth forecast for China by 0.2 percentage point to 4.4 percent, citing lower US effective tariff rates on Chinese goods and stimulus measures.

With risks still tilted to the downside since the January 2026 WEO Update, the IMF suggested a comprehensive policy package combining domestic measures with coordinated international actions to strengthen resilience and foster adaptability.

It also stated in the report that "trade restrictions play a limited role in correcting imbalances but can worsen output," and urged countries to cooperate and take coordinated actions to restore stability to international economic relations.