IMF Holds Firm to 3% Growth Forecast Despite Global Economic Challenges and Fallout from Middle East War

[Financial News] The International Monetary Fund (IMF) maintained its forecast of roughly 3% global economic growth this year despite the energy shock caused by the war in the Middle East. Strategic oil-reserve releases and the artificial intelligence (AI) boom are believed to have prevented a sharp economic downturn. However, uncertainty remains high due to surging national debt, stalled disinflation, and energy security concerns as winter approaches in the Northern Hemisphere.
IMF spokesperson Julie Kozack said at a regular briefing on the 10th local time, "Despite the war in the Middle East continuing for six months, the global economy has shown considerable resilience." She added, "Global economic growth in 2026 is expected to remain at around 3%, in line with the previous forecast."
In its World Economic Outlook (WEO) report released in July, the IMF projected global growth of 3.0% in 2026. At the time, the IMF assumed that the war in the Middle East would begin to subside around mid-July. However, the conflict has continued and spread amid escalating clashes between the United States of America and Iran and heightened military tensions in Yemen. The IMF plans to release revised economic forecasts at the annual meetings of the IMF and World Bank (WB), which will be held in Bangkok from October 12 to 18.
Kozack explained that strategic oil-reserve releases, efforts to diversify energy supplies, and measures to reduce demand had helped the economy hold up despite the energy shock caused by the war. "Supply-side setbacks that raise energy and food prices and demand-side tailwinds driven by AI-based technological innovation are offsetting each other," she said.
However, risks remain in several areas. Oil and gas prices are still high, while demand to replenish strategic reserves and increased winter heating demand are combining to prolong the energy shock. The IMF also noted that the disinflationary trend that had continued since the 2022 cost-of-living crisis has stalled.
Global debt pressures are also severe. Kozack warned, "Global public debt is approaching 100% of gross domestic product (GDP), its highest level since World War II, and debt ratios are expected to rise further, particularly in advanced economies." She added that liquidity crises are intensifying in developing countries, including those in Africa.
The IMF urged central banks to focus on their core mandate of maintaining price stability, while calling on fiscal authorities to establish medium-term fiscal consolidation plans. It also emphasized the need to raise growth potential through structural reforms and eliminate regulations that hinder growth.
Meanwhile, the IMF plans to closely analyze the impact on the global economy of new sanctions announced recently by the United States of America, including third-party sanctions, also known as secondary sanctions, targeting Iran. The analysis will be included in the WEO report scheduled for release next month.
[email protected] Yoon Jae-jun Reporter