## CHAPTER 1 GLOBAL PROSPECTS AND POLICIES

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### Global growth and short-term outlook
- Global growth: 2025 = 3.4 percent; projected 2026 = 3.1 percent; 2027 = 3.2 percent (April 2026 WEO reference).
- At market exchange rates: world output projected to grow by 2.6 percent in both 2026 and 2027.
- Assumptions on Middle East conflict: relatively short‑lived (lasting a few more weeks) with disruptions fading and production and exports normalizing by mid-2026.
- Revisions versus preconflict and recent updates:
  - Near-term global growth revised downward by 0.2 percentage point relative to preconflict WEO forecasts.
  - Cumulative growth over 2026–27 revised downward by 0.5 percentage point for low‑income net energy‑importing economies (relative to January 2026 WEO Update); downward revision is 0.2 percentage point in energy‑importing advanced economies; net energy‑exporting economies see positive or neutral revisions.
- Selected country outcomes (sequential or annual figures where provided):
  - China: sequential growth accelerated (per IMF staff seasonal adjustment) to 6.1 percent as strong exports offset weak domestic demand.
  - United States: growth slowed to 0.5 percent in Q4 2025; federal government shutdown partly contracted public expenditure; technology‑related spending expansion remained strong but its GDP effect offset by high import share.
  - Euro area excluding Ireland: sequential growth accelerated to 1.5 percent driven by increased fiscal spending in Germany.
  - Japan: sequential growth rebounded to 1.3 percent owing to stronger consumption and investment.
  - World headline growth for 2025: 3.4 percent.

### Global trade and reorientation of supply chains
- World trade volume (goods and services): 2025 = 5.1 percent; 2026 = 2.8 percent; 2027 = 3.8 percent.
- Trade patterns and rewiring:
  - Global trade remained robust with brisk expansion in technology‑related exports offsetting slowing momentum elsewhere.
  - Technology exports classified by Harmonized System codes 8419, 8470–8473, and 85.
  - US imports from China dropped sharply; imports from Canada also declined.
  - US imports increased from Taiwan Province of China, Vietnam, and, to a lesser extent, Mexico.
  - Chinese exports reoriented from the United States to other Asian economies and temporarily to Europe.
- China’s merchandise goods trade surplus: record $1.2 trillion (6 percent of GDP) in 2025.
- Exports of goods and services projected to decline as a percent of world GDP over the forecast horizon; decline in services trade is much less pronounced than in goods trade.

### Inflation, commodities, and financial conditions
- Global headline inflation: 2025 = 4.1 percent; projected 2026 = 4.4 percent; 2027 = 3.7 percent.
- Country inflation notes:
  - United States: core personal consumption expenditure inflation year‑over‑year was 3.1 percent in January 2026.
  - Japan: inflation fell sharply in January 2026 to below the 2 percent target, reflecting provisional gasoline tax abolition.
- Commodity price projections (reference forecast):
  - Energy commodity prices expected to rise by 19 percent in 2026.
  - Oil prices expected to increase by 21.4 percent in 2026, corresponding to average petroleum spot price index averaging $82 per barrel (Table entries: oil average price $67.74 in 2025; assumed $82.22 in 2026 and $75.97 in 2027; percent changes 2025 = –14.4; 2026 = 21.4; 2027 = –7.6).
  - Natural gas prices expected to be affected more than oil prices.
  - Food prices expected to increase more than projected in October 2025 due to higher energy and fertilizer prices, disrupted shipping routes, and increased transport costs.
  - Base and precious metal prices projected to maintain 2025 gains.
- Financial conditions:
  - Risk‑off sentiment after the Middle East conflict caused moderate tightening of global financial conditions; conditions remain accommodative historically.
  - Concerns about inflation increased bond yields and drove equity prices down; emerging markets—especially commodity importers and those with preexisting vulnerabilities—were affected the most.
  - US dollar strengthened somewhat; market volatility remained relatively subdued.
  - Geopolitical tensions contributed to sharp swings in the gold price.

### Monetary policy projections
- United States: federal funds rate projected to be reduced gradually, reaching a terminal rate of about 3.1 percent by end‑2027.
- Euro area: policy rate expected to increase by 50 basis points over the course of 2026.
- Japan: policy rate projected to gradually rise toward a neutral setting of about 1.5 percent.

### Fiscal policy projections and public debt
- Advanced economies (average): fiscal policy expected to be neutral in 2026 and tighten in later forecast years despite widening deficits in major jurisdictions.
- United States:
  - General government fiscal‑balance‑to‑GDP ratio expected to deteriorate by 0.7 percentage point in 2026 to 7½ percent, reflecting the impact of the One Big Beautiful Bill Act (OBBBA), partly offset by additional tariff revenues.
  - Under current policies, US public debt projected to climb from 124 percent of GDP in 2025 to 142 percent in 2031.
- Euro area:
  - Germany’s deficit widening by over 1 percentage point to 3.8 percent as infrastructure and defense spending ramp up.
  - Euro area debt‑to‑GDP rises from 87 percent in 2025 to 90 percent in 2031.
- Japan:
  - Deficit projected to widen by 1 percentage point of GDP in 2026; fiscal policy expected to remain moderately expansionary through 2030.
- Emerging market and developing economies:
  - On average, fiscal policy projected to gradually tighten over the forecast horizon.
  - China: deficit expected to widen by 0.3 percentage point in 2026 before starting to narrow in the medium term.
  - Public debt in emerging market and developing economies projected to rise from 74 percent of GDP in 2025 to 86 percent of GDP in 2031.

### Trade policy assumptions and tariffs
- Projections assume trade policies as of end‑March remain permanent, including measures framed as temporary or pending (for example, US Section 122 tariffs are assumed to be extended or reimposed under different statutes).
- US effective statutory tariff rate underlying the projections: 13.5 percent (compared with 18.7 percent in the October 2025 forecast).
- Effective tariff rate imposed by the rest of the world on imports from the United States: unchanged at 3.5 percent.
- Evidence indicates the direct incidence of tariffs has largely fallen on US importers and consumers.

### Downside scenarios and risks (summary of scenario assumptions and impacts)
- Two model‑based downside scenarios: Adverse and Severe (more protracted/intense conflict).
- Adverse scenario assumptions:
  - Oil prices increase by 80 percent starting in 2026:Q2 relative to the January 2026 WEO Update, then fall back to about 20 percent above baseline in 2027 (average petroleum spot price index of about $100 per barrel in 2026 and about $75 in 2027).
  - Gas prices increase correspondingly.
  - One‑year‑ahead inflation expectations increase by 50 basis points in advanced economies and 90 basis points in emerging markets excluding China.
  - Corporate premiums rise by 50 basis points in advanced economies plus China and by 100 basis points in emerging markets excluding China.
  - Sovereign spreads in emerging markets excluding China increase by 50 basis points; tightening in financial conditions fades in 2027.
- Severe scenario assumptions:
  - Oil (gas) prices 100 (200) percent higher than the January 2026 WEO Update starting in 2026:Q2 and staying at that level in 2027.
  - Food commodity prices increase by 5 percent in 2026 and 10 percent in 2027.
  - One‑year‑ahead inflation expectations increase by 100 basis points in advanced economies and 130 basis points in emerging markets excluding China by 2027.
  - Corporate risk premiums rise by 100 basis points in advanced economies plus China and by 200 basis points in emerging markets excluding China in 2026–27.
  - Sovereign spreads increase by 100 basis points in emerging markets excluding China over 2026–27.
- Scenario impacts (relative to baseline):
  - Adverse scenario: global growth reduced by 0.8 percentage point in 2026 (to 2.5 percent) and by 0.2 percentage point in 2027 (to 3.0 percent); inflation 1.5 percentage points higher at 5.4 percent in 2026 and 0.4 percentage point higher at 3.9 percent in 2027.
  - Severe scenario: global growth reduced by 1.3 percentage points in 2026 and by 1.0 percentage point in 2027 (to 2.2 percent); inflation 190 basis points higher in 2026 (reaching 5.8 percent) and 260 basis points higher in 2027 (reaching 6.1 percent).
  - Distributional effects: emerging markets hit harder than advanced economies (adverse: 2026 growth lower by 1.3 percentage points in emerging markets excluding China and by 0.6 percentage point in advanced economies; severe: 2026 lowered by 1.9 percentage points in emerging markets excluding China, almost twice the decline in advanced economies).

### Overview: Key projections (table excerpt figures and commodity prices)
- World output: 2025 = 3.4 percent; 2026 = 3.1 percent; 2027 = 3.2 percent.
- Advanced Economies: 2025 = 1.9 percent; 2026 = 1.8 percent; 2027 = 1.7 percent.
- United States: 2025 = 2.1 percent; 2026 = 2.3 percent; 2027 = 2.1 percent.
- Euro Area: 2025 = 1.4 percent; 2026 = 1.1 percent; 2027 = 1.2 percent.
- Japan: 2025 = 1.2 percent; 2026 = 0.7 percent; 2027 = 0.6 percent.
- Emerging Market and Developing Economies: 2025 = 4.4 percent; 2026 = 3.9 percent; 2027 = 4.2 percent.
- China: 2025 = 5.0 percent; 2026 = 4.4 percent; 2027 = 4.0 percent.
- India (fiscal year basis): 2025 = 7.6 percent; 2026 = 6.5 percent; 2027 = 6.5 percent.
- World Consumer Prices: 2025 = 4.1 percent; 2026 = 4.4 percent; 2027 = 3.7 percent.
- Commodity — Oil average price (US$ per barrel): 2025 = $67.74; 2026 = $82.22; 2027 = $75.97.

### Medium-term outlook and trade fragmentation costs
- Global economy projected to expand at an average annual pace of 3.1 percent in 2028–31 (historical prepandemic 2000–19 average = 3.7 percent).
- Main driver of slowdown: China’s growth slowing and average annual growth slowing in several major Asian economies, the Middle East and Central Asia, sub‑Saharan Africa, North America, and Europe.
- Trade fragmentation long‑term GDP loss estimates from trade fragmentation alone: range between 0.3 percent and 7.0 percent after 10 years.

### Risks to the outlook — downside and other scenarios
- Geopolitical risk:
  - A one‑standard‑deviation increase in geopolitical risk associated with a decline in real GDP of about 0.8 percent one year after the initial shock.
  - The average geopolitical risk in Europe rose by about 1.2 standard deviations in 2022 and remained elevated at about 0.5 standard deviation in 2025.
  - Roughly 10 percent of the estimated GDP impact can be attributed to the direct effect of higher oil prices.
  - Increased geopolitical risk associated with a level of prices about 2.5 percent higher relative to the no‑shock baseline three years after the shock; nominal exchange rate depreciates by about 1.8 percent one year after the shock.
- Other downside channels: volatile commodity prices, disrupted supply chains, exchange rate depreciation, food security threats (including fertilizer market disruptions), erosion of real incomes, external imbalances, capital flow reversals, refinancing risk, erosion of confidence in institutions, and constrained official development assistance (ODA).
- Upside risk: sooner materialization of AI productivity gains could lift global growth by as much as 0.3 percentage point in the near term and by 0.1–0.8 percentage point in the medium term if gains materialize and benefits are widely shared.

### Policy guidance and recommendations
- Structural reforms to raise potential output and resilience:
  - Upskill the labor force and reduce barriers to labor mobility.
  - Streamline business regulations, reduce internal trade barriers, enhance competition, and promote innovation.
  - Scale up energy and digital infrastructure; implement labor market programs to manage workforce transitions.
  - In low‑income countries, close gaps in energy and digital infrastructure and reduce labor concentration in sectors where AI gains are limited.
- Trade and multilateral cooperation:
  - Progress in trade talks and enhanced policy predictability can lower tariffs, support activity, and unlock investment.
  - Modernize trade rules to reflect structural shifts and avoid discriminatory or distortive arrangements and export controls.
  - Broad reduction in US tariffs and reduction in uncertainty could lift global growth by 0.6 percentage point (scenario C).
- Immediate shock management — monetary and financial stability:
  - Central banks should act decisively in line with mandates to preserve price stability; communication and credibility are essential.
  - Where appropriate, wait to discern shock duration if policy was properly calibrated; otherwise, adjust policy rates consistent with price stability.
  - Strengthen prudential oversight, preserve liquidity, capital, and international reserve buffers; consider temporary FX intervention or targeted capital flow measures in select cases.
- Fiscal policy, protecting the vulnerable, and debt sustainability:
  - Use temporary, targeted, and time‑bound fiscal measures when unavoidable; include clear sunset clauses and identified offsets.
  - For commodity windfalls, maintain fiscal discipline within coherent medium‑term frameworks focused on debt sustainability.
  - Rebuild fiscal buffers, strengthen revenues through base broadening and improved tax administration, enhance spending efficiency, and reorient expenditures toward infrastructure, skills, and well‑targeted social protection.
  - High‑debt low‑income countries may need international cooperation, timely concessional financing, and debt resolution.
- International cooperation:
  - Support refugee inflows with adequately funded integration measures and international contributions.
  - Emergency liquidity (including IMF facilities) is a crucial backstop; timely and orderly sovereign debt resolution is required.

### Special Feature: Market developments and the economics of rare earths (summary)
- Market structure and importance:
  - REEs: 17 metals divided into LREEs and HREEs; essential for permanent magnets and key for electric vehicles, renewable energy, defense, semiconductors, and consumer electronics.
  - Market size (2024): rare earth oxides (REOs) ≈ $6 billion; permanent magnets ≈ $25 billion (Market Data Forecast 2025).
  - Magnet‑4 elements (neodymium, praseodymium, terbium, dysprosium) comprise 96 percent of total REO market value but only 23 percent of REO weight.
- China’s concentration by stage (selected shares cited):
  - LREE mining: China’s share fell from 97 percent at peak in 2010 to 58 percent in 2024.
  - China maintains 88 percent of oxide separation capacity and 93 percent of metal refining (LREEs).
  - HREEs: China retains near monopoly—98 percent of mining (including Myanmar), 97 percent of oxide separation, 95 percent of metal refining, and 90 percent of permanent magnet production (Bedford 2025).
- Market events and disruptions:
  - April 4, 2025: China introduced special licensing requirement—mainly for HREEs and related products—causing export slowdown April–June 2025 (permanent magnet exports down about 70 percent year‑over‑year as of May 2025).
  - October 2025: China tightened REE licensing; suspended in November under a China‑US agreement; January 2026: China restricted HREE exports to Japan; strong REE export growth continued in January and February 2026.
- Macroeconomic exposure and model results:
  - Value added at risk (VAAR) for 34 of 405 US sectors using rare earths: $233 billion in goods and services value in 2017, equivalent to 0.8 percent of nominal GDP; in the United States permanent magnets drive about 70 percent of VAAR.
  - Model simulation (persistent 80 percent reduction in rare earth inputs):
    - Low substitution elasticity (elasticity = 0.015): United States GDP decline of 1.5 percent; Germany GDP decline ≈ 1.2 percent (VAAR = 2.5 percent).
    - High substitution elasticity (elasticity = 0.8): average estimated GDP losses negligible, averaging 0.006 percent.
- Coping strategies and policy responses observed:
  - Stockpiling, recycling, substitution, reshoring and import diversification—each with constraints (timelines, cost, technical barriers).
  - Policy measures implemented: price floors and offtake agreements (neodymium price example ≈ $55 per kilogram), direct government financial support (equity stakes, loans, grants), and international coordination/joint financing (G7 Critical Minerals Action Plan mobilized estimated $6.4 billion).
  - Examples cited: July 2025 MP Materials deal; January 2026 US Department of Commerce and USA Rare Earth agreement.
- Quantifying industrial policy costs to de‑risk supply chains:
  - Policy objective: achieve 25 percent self‑sufficiency in rare earth processing by 2035 for the US (15 percentage points higher than baseline).
  - Preliminary finding: sizable interventions required; unilateral investment subsidy scenarios imply large fiscal costs.
  - Fiscal costs and market size figures:
    - Global REEs’ market size ≈ $6 billion.
    - US share ≈ 14 percent (≈ $0.81 billion).
    - Investment subsidy fiscal costs under unilateral scenario over first decade amount to 141 percent of the annual US market size—equivalent to about $1.19 billion ($0.81 billion).
  - Price floor parameters cited: price floor required for unilateral scenario ≈ 2.4 times the period market price (variants 2.42 times and 2.2 times noted for different implementations).
  - Investment subsidies to refiners outside China and to US refiners cited with required subsidy rates (77.2 percent, 77.8 percent in comparative implementations).
- Conclusions and policy recommendations on REEs:
  - Large disruptions could substantially reduce GDP in many economies in the short term when substitution is limited.
  - Avoiding trade tensions and restrictions is first‑best.
  - De‑risking supply chains through targeted industrial policies is fiscally costly; costs are lower if de‑risking pursued simultaneously by multiple importers and if instruments target expansion of new production capacity.
  - Complementary structural reforms: simpler mining permits, investment in specialized skills (separation chemistry to metallurgy), and competitive allocation of subsidies.
  - Security benefits show diminishing returns; first 10–20 percent increase in self‑sufficiency delivers largest vulnerability reduction; modest self‑sufficiency rates can substantially reduce vulnerability at minimal efficiency costs.

*Source: International Monetary Fund, World Economic Outlook: Global Prospects and Policies (Chapter 1, April 2026).*

### 3.9 percent on an annualized basis. In China, sequen-

### ch1 - 3.9 percent on an annualized basis. In China, sequen-

### Global growth and short-term outlook
- Global growth slowed from the 3.4 percent achieved in 2025 to a projected 3.1 percent in 2026 and 3.2 percent in 2027 in the April 2026 WEO reference forecast.
- At market exchange rates, world output is projected to grow by 2.6 percent in both 2026 and 2027.
- The reference forecast assumes the Middle East conflict is relatively short-lived (lasting a few more weeks) with disruptions fading and production and exports from the region normalizing by mid-2026.
- Compared with the preconflict WEO forecasts, near-term global growth is revised downward by 0.2 percentage point.
- Cumulative growth over 2026–27 is revised downward by 0.5 percentage point for low-income net energy-importing economies relative to the January 2026 WEO Update; downward revision is 0.2 percentage point in energy-importing advanced economies; net energy-exporting economies see positive or neutral revisions.
- Specific country and regional outcomes noted:
  - China: sequential growth accelerated (per IMF staff seasonal adjustment) to 6.1 percent as strong exports offset weak domestic demand.
  - United States: growth slowed to 0.5 percent in Q4 2025, lower than expected in the January 2026 WEO Update, partly due to a government shutdown that temporarily contracted public expenditure; technology-related spending expansion remained strong but its GDP effect was offset by high import share.
  - Euro area excluding Ireland: growth accelerated to 1.5 percent driven by increased fiscal spending in Germany.
  - Japan: growth rebounded to 1.3 percent owing to stronger consumption and investment.
  - World headline growth for 2025 was 3.4 percent.

### Global trade and reorientation of supply chains
- Global trade remained robust, with brisk expansion in technology-related exports offsetting slowing momentum in other categories.
- Technology exports classification used: Harmonized System codes 8419, 8470–8473, and 85.
- Rewiring of global supply chains and trading relations:
  - US imports from China dropped sharply; imports from Canada also declined.
  - Increases in US imports from Taiwan Province of China, Vietnam, and, to a lesser extent, Mexico offset those dips.
  - Chinese exports were reoriented from the United States to other Asian economies and temporarily to Europe.
- China’s merchandise goods trade surplus hit a record $1.2 trillion (6 percent of GDP) in 2025.

### Inflation, commodities, and financial conditions
- Global inflation has been largely steady but with divergence:
  - United States: core personal consumption expenditure inflation year-over-year was 3.1 percent in January 2026, remaining above target.
  - Japan: inflation fell sharply in January 2026 to below the 2 percent target, reflecting the provisional gasoline tax abolition.
- Commodity price projections (reference forecast):
  - Energy commodity prices expected to rise by 19 percent in 2026 (versus a small decline projected in October 2025 WEO).
  - Oil prices expected to increase by 21.4 percent, corresponding to the average petroleum spot price index averaging $82 per barrel.
  - Natural gas prices expected to be affected more than oil prices.
  - Food prices expected to increase more than projected in October 2025 due to higher energy and fertilizer prices, disrupted shipping routes, and increased transport costs.
  - Base and precious metal prices projected to maintain the gains experienced in 2025.
- Global financial conditions:
  - Risk-off sentiment after the Middle East conflict caused moderate tightening of global financial conditions, but conditions remain accommodative historically.
  - Concerns about inflation increased bond yields and drove equity prices down.
  - Emerging markets—especially commodity importers and those with preexisting vulnerabilities—were affected the most.
  - The US dollar strengthened somewhat; market volatility remained relatively subdued.
  - Geopolitical tensions contributed to sharp swings in the gold price.

### Monetary policy projections
- United States: federal funds rate projected to be reduced gradually, reaching a terminal rate of about 3.1 percent by end-2027.
- Euro area: policy rate expected to increase by 50 basis points over the course of 2026.
- Japan: policy rate projected to gradually rise toward a neutral setting of about 1.5 percent.

### Fiscal policy projections and public debt
- Advanced economies (average): fiscal policy expected to be neutral in 2026 and tighten in later forecast years despite widening deficits in major jurisdictions.
- United States:
  - General government fiscal-balance-to-GDP ratio expected to deteriorate by 0.7 percentage point in 2026 to 7½ percent, reflecting the impact of the One Big Beautiful Bill Act (OBBBA), partly offset by additional tariff revenues.
  - Under current policies, US public debt projected to climb from 124 percent of GDP in 2025 to 142 percent in 2031.
- Euro area:
  - Fiscal balance projected to decline; Germany’s deficit widening by over 1 percentage point to 3.8 percent as infrastructure and defense spending ramp up.
  - Euro area debt-to-GDP rises from 87 percent in 2025 to 90 percent in 2031.
- Japan:
  - Deficit projected to widen by 1 percentage point of GDP in 2026; fiscal policy expected to remain moderately expansionary through 2030.
- Emerging market and developing economies:
  - On average, fiscal policy projected to gradually tighten over the forecast horizon.
  - China: deficit expected to widen by 0.3 percentage point in 2026 before starting to narrow in the medium term.
  - Public debt in emerging market and developing economies projected to rise from 74 percent of GDP in 2025 to 86 percent of GDP in 2031.

### Trade policy assumptions and tariffs
- Projections assume trade policies as of end-March remain permanent, including measures framed as temporary or pending (for example, US Section 122 tariffs are assumed to be extended or reimposed under different statutes).
- The US effective statutory tariff rate underlying the projections is 13.5 percent, compared with 18.7 percent in the October 2025 forecast.
- The corresponding effective tariff rate imposed by the rest of the world on imports from the United States is unchanged at 3.5 percent.
- Evidence to date indicates the direct incidence of tariffs has largely fallen on US importers and consumers.

### Downside scenarios and risks
- Two model-based downside scenarios are considered: an adverse scenario and a severe scenario, reflecting a more protracted and intense conflict:
  - Adverse scenario assumptions:
    - Oil prices increase by 80 percent starting in 2026:Q2 relative to the January 2026 WEO Update, then fall back to about 20 percent above baseline in 2027 (average petroleum spot price index of about $100 per barrel in 2026 and about $75 in 2027).
    - Gas prices increase correspondingly.
    - One-year-ahead inflation expectations increase by 50 basis points in advanced economies and 90 basis points in emerging markets excluding China.
    - Corporate premiums rise by 50 basis points in advanced economies plus China and by 100 basis points in emerging markets excluding China.
    - Sovereign spreads in emerging markets excluding China increase by 50 basis points; tightening in financial conditions fades in 2027.
  - Severe scenario assumptions:
    - Oil (gas) prices 100 (200) percent higher than the January 2026 WEO Update starting in 2026:Q2 and staying at that level in 2027.
    - Food commodity prices increase by 5 percent in 2026 and 10 percent in 2027.
    - One-year-ahead inflation expectations increase by 100 basis points in advanced economies and 130 basis points in emerging markets excluding China by 2027.
    - Corporate risk premiums rise by 100 basis points in advanced economies plus China and by 200 basis points in emerging markets excluding China in 2026–27.
    - Sovereign spreads increase by 100 basis points in emerging markets excluding China over 2026–27.
- The reference forecasts are complemented by these top-down projections because the scenarios become more likely over time as hostilities and related disruptions continue.

*International Monetary Fund | April 2026 — Chapter 1, World Economic Outlook (excerpt)*

### CHAPTER 1 GLObAL PROSPECTS AND POLICIES

### CHAPTER 1 GLObAL PROSPECTS AND POLICIES

### Overview: Key projections (Table 1.1 and Table 1.2)
- World output: 2025 = 3.4 percent; 2026 = 3.1 percent; 2027 = 3.2 percent.
- Advanced Economies: 2025 = 1.9 percent; 2026 = 1.8 percent; 2027 = 1.7 percent.
- United States: 2025 = 2.1 percent; 2026 = 2.3 percent; 2027 = 2.1 percent.
- Euro Area: 2025 = 1.4 percent; 2026 = 1.1 percent; 2027 = 1.2 percent.
- Japan: 2025 = 1.2 percent; 2026 = 0.7 percent; 2027 = 0.6 percent.
- United Kingdom: 2025 = 1.3 percent; 2026 = 0.8 percent; 2027 = 1.3 percent.
- Emerging Market and Developing Economies: 2025 = 4.4 percent; 2026 = 3.9 percent; 2027 = 4.2 percent.
- Emerging and Developing Asia: 2025 = 5.5 percent; 2026 = 4.9 percent; 2027 = 4.8 percent.
- China: 2025 = 5.0 percent; 2026 = 4.4 percent; 2027 = 4.0 percent.
- India (fiscal year basis): 2025 = 7.6 percent; 2026 = 6.5 percent; 2027 = 6.5 percent.
- Middle East and Central Asia: 2025 = 3.6 percent; 2026 = 1.9 percent; 2027 = 4.6 percent.
- Saudi Arabia: 2025 = 4.5 percent; 2026 = 3.1 percent; 2027 = 4.5 percent.
- Sub-Saharan Africa: 2025 = 4.5 percent; 2026 = 4.3 percent; 2027 = 4.4 percent.
- Nigeria: 2025 = 4.0 percent; 2026 = 4.1 percent; 2027 = 4.3 percent.
- South Africa: 2025 = 1.1 percent; 2026 = 1.0 percent; 2027 = 1.3 percent.
- Latin America and the Caribbean: 2025 = 2.4 percent; 2026 = 2.3 percent; 2027 = 2.7 percent.
- Brazil: 2025 = 2.3 percent; 2026 = 1.9 percent; 2027 = 2.0 percent.
- Mexico: 2025 = 0.6 percent; 2026 = 1.6 percent; 2027 = 2.2 percent.
- World Trade Volume (goods and services): 2025 = 5.1 percent; 2026 = 2.8 percent; 2027 = 3.8 percent.
- Commodity prices:
  - Oil: average price in US dollars a barrel was $67.74 in 2025; assumed price $82.22 in 2026 and $75.97 in 2027.
  - Table entries show oil percent changes: 2025 = –14.4; 2026 = 21.4; 2027 = –7.6 (as presented in Table 1.1).
- World Consumer Prices: 2025 = 4.1 percent; 2026 = 4.4 percent; 2027 = 3.7 percent.
- Advanced Economies inflation: 2025 = 2.5 percent; 2026 = 2.8 percent; 2027 = 2.2 percent.
- Emerging Market and Developing Economies inflation: 2025 = 5.2 percent; 2026 = 5.5 percent; 2027 = 4.6 percent.

### Scenarios and macroeconomic risks
- Adverse scenario assumptions:
  - Oil prices: increase by 50 percent in the second quarter relative to baseline and mostly unwind in 2027; food commodity prices increase by 2.5 percent.
  - One-year-ahead inflation expectations: increase by as much as 50 basis points by 2027 in advanced economies and as much as 90 basis points in emerging markets excluding China; unchanged in China.
  - Risk-off episode: corporate premiums up by 50 basis points in advanced economies and China; emerging markets excluding China experience a 100 basis point increase in corporate premiums and a 50 basis point increase in sovereign spreads.
  - Monetary policy response: assigns less weight to output stabilization given impact on inflation expectations.
- Severe scenario assumptions:
  - Oil prices: increase by 100 percent starting in Q2 2026 relative to the January 2026 WEO Update baseline and stay at that level in 2027 (corresponding to an average petroleum spot price index of about $110 per barrel in 2026 and about $125 in 2027).
  - Gas prices for Europe and Asia: increase by 200 percent over the same period.
  - Food commodity prices: increase by 5 percent in 2026 and 10 percent in 2027.
  - One-year-ahead inflation expectations: ratchet up by as much as 100 basis points in advanced economies by 2027 and as much as 130 basis points in emerging markets excluding China by 2027.
  - Risk-off episode: corporate premiums up by 100 basis points in advanced economies and China in 2026 and remain in 2027; emerging markets excluding China experience sovereign spreads widening of 100 basis points and corporate spreads increase by 200 basis points.
  - Monetary policy response: geared toward containing inflationary pressures rather than stabilizing output; federal funds rate increases by 50 basis points in 2026 and 100 basis points in 2027 relative to baseline.
- Scenario impacts (relative to baseline):
  - Adverse scenario: global growth reduced by 0.8 percentage point in 2026 (to 2.5 percent) and by 0.2 percentage point in 2027 (to 3.0 percent); inflation 1.5 percentage points higher at 5.4 percent in 2026 and 0.4 percentage point higher at 3.9 percent in 2027. Most 2026 impact driven by higher energy prices; 2027 persistence driven by tighter financial conditions and higher inflation expectations; modest tightening in policy rates of 50 basis points in advanced economies by 2027 and larger increase in emerging market economies.
  - Severe scenario: global growth reduced by 1.3 percentage points in 2026 (close call for global recession, defined as growth rate below 2 percent) and by 1.0 percentage point in 2027 (to 2.2 percent); inflation 190 basis points higher in 2026 (reaching 5.8 percent) and 260 basis points higher in 2027 (reaching 6.1 percent). Oil and gas price increases subtract 0.6 percentage point in 2026 and a further 0.5 percentage point in 2027. Amplification through inflation expectations and financial conditions reduces growth by 0.7 percentage point in 2026 and 0.5 percentage point in 2027.
- Distributional effects:
  - Both scenarios hit emerging markets harder than advanced economies.
  - Adverse scenario: growth in 2026 lower by 1.3 percentage points in emerging markets excluding China and by 0.6 percentage point in advanced economies.
  - Severe scenario: growth in 2026 lowered by 1.9 percentage points in emerging markets excluding China, almost twice the decline in advanced economies.

### Advanced economies: growth drivers and revisions
- Aggregate projection: 2026 = 1.8 percent; 2027 = 1.7 percent (modest effect of Middle East conflict overall, –0.2 percentage point in 2026 relative to preconflict forecast).
- United States:
  - Projected growth: 2026 = 2.3 percent; 2027 = 2.1 percent.
  - Revisions and drivers: 0.1 percentage point downward revision relative to January 2026 WEO Update reflecting small negative effect from the war offset by rebound after 2025 federal government shutdown, stronger-than-previously-assumed productivity growth, fiscal support (including tax incentives and OBBBA corporate investment incentives); IEEPA ruling may reduce tariff-related fiscal revenues but impact expected to be small.
- Euro area:
  - Projected growth: 2026 = 1.1 percent; 2027 = 1.2 percent.
  - Revisions: –0.2 percentage point in each year versus January 2026 WEO Update.
  - Drivers: negative impact from Middle East conflict, lingering effects of persistent rise in energy prices since Russia’s invasion of Ukraine, real appreciation of the euro affecting manufacturing; planned defense spending increases expected to materialize later, commitments gradual through 2035.
- Japan:
  - Projected growth: 2026 = 0.7 percent; 2027 = 0.6 percent.
  - Revision: upward for 2026 relative to October 2025 reflecting fiscal stimulus package announced last November, stronger domestic-demand carryover from 2025, government measures to limit higher energy prices; offset partly by weaker external demand and the Middle East conflict.
- United Kingdom:
  - Projected growth: 2026 = 0.8 percent; 2027 = 1.3 percent.
  - Revision: 2026 projection is a downward revision of 0.5 percentage point relative to October 2025 forecast due to the war and slower pace of monetary easing.
- Canada:
  - Projected growth: 2026 = 1.5 percent; 2027 = 1.9 percent.
  - Drivers: softer near-term profile from weaker momentum at end-2025 and slower population growth; earlier monetary easing and supportive fiscal policy sustain domestic demand; broadly unchanged from October 2025 forecast with positive terms-of-trade shock from higher oil prices offsetting other war effects.

### Emerging Market and Developing Economies: heterogeneity and revisions
- Aggregate projection: 2026 = 3.9 percent; 2027 = 4.2 percent. Conflict in the Middle East lowers aggregate growth in 2026 by 0.3 percentage point relative to the preconflict forecast.
- Emerging and Developing Asia:
  - Aggregate: 2026 = 4.9 percent; 2027 = 4.8 percent.
  - China: 2026 = 4.4 percent (revised upward by 0.2 percentage point relative to October and downward by 0.1 percentage point relative to January); 2027 = 4.0 percent. Drivers include lower US effective tariff rates on Chinese goods and stimulus measures offsetting conflict shock; structural headwinds (housing sector slowdown, declining labor force, decreasing returns on investment, slower productivity) weigh on 2027.
  - India: 2025 = 7.6 percent (revised upward by 1.0 percentage point relative to October); 2026 = 6.5 percent (revised upward by 0.3 percentage point relative to October and 0.1 percentage point relative to January); 2027 = 6.5 percent. Drivers include carryover from strong 2025 outturn and decline in additional US tariffs on Indian goods from 50 to 10 percent.
  - Philippines: growth revised downward by 1.5 percentage points for 2026 relative to January; war shock compounds negative base effects from weaker-than-expected 2025 outturn (sharp decline in public investment and confidence).
- Middle East and Central Asia:
  - Aggregate: 2026 = 1.9 percent; 2027 = 4.6 percent (most direct impact of conflict with expected subsequent rebound).
  - Country notes:
    - Iran: 2026 revised downward by 7.2 percentage points relative to January to –6.1 percent; 2027 revised upward by 1.6 percentage points to 3.2 percent.
    - Saudi Arabia: 2026 revised downward by 1.4 percentage points relative to January to 3.1 percent; 2027 revised upward by 0.9 percentage point to 4.5 percent.
  - Drivers: diminished production and exports for directly affected commodity exporters; recovery in 2027 assumes normalization of energy production and transportation over next few months contingent on conflict duration and damage extent.
- Sub-Saharan Africa:
  - Aggregate: 2026 = 4.3 percent; 2027 = 4.4 percent.
  - Nigeria: 2026 = 4.1 percent; 2027 = 4.3 percent (growth momentum sustained via improved macroeconomic stability and positive terms-of-trade effects; higher goods and transport costs are headwinds).
  - South Africa: 2026 = 1.0 percent; 2027 = 1.3 percent (disruptions from the conflict slow growth in 2026; recovery supported by structural-reform-driven private investment resumption).
  - Other countries in the region: aggregate growth expected to decline from 5.6 percent in 2025 to 5.2 percent in both 2026 and 2027, revised downward relative to January by a cumulative 0.6 percentage point.
- Latin America and the Caribbean:
  - Aggregate: 2026 = 2.3 percent; 2027 = 2.7 percent.
  - Brazil: 2026 = 1.9 percent; 2027 = 2.0 percent (war expected to have a small net positive effect in 2026 due to net energy exporter status).

### Financial conditions, inflation, and policy trade-offs
- Inflation and expectations:
  - Adverse scenario raises inflation by 1.5 percentage points to 5.4 percent in 2026 and by 0.4 percentage point to 3.9 percent in 2027.
  - Severe scenario raises inflation by 190 basis points to 5.8 percent in 2026 and by 260 basis points to 6.1 percent in 2027.
  - One-year-ahead inflation expectations can rise substantially (see scenario assumptions above), amplifying effects on real activity.
- Financial conditions:
  - Adverse scenario: corporate and sovereign spreads widen (see scenario assumptions) with tightening fading in 2027.
  - Severe scenario: larger and more persistent tightening in financial conditions; corporate and sovereign spreads widen further (see scenario assumptions).
- Monetary policy responses:
  - Scenarios assume monetary policy responses that prioritize containing inflationary pressures over output stabilization, leading to modest to moderate increases in policy rates (including a specified federal funds rate path in the severe scenario: +50 basis points in 2026 and +100 basis points in 2027 relative to baseline).

*Source: IMF staff estimates.*

### 0.2 percentage point. In 2027, slowing global

### ch1 - 0.2 percentage point. In 2027, slowing global

### Regional Growth Highlights
- Mexico: economy expanding at a rate of 1.6 percent in 2026 and 2.2 percent in 2027.
- Emerging and developing Europe: sharp slowdown in 2025 to a growth rate of 2.0 percent; average growth of 2.0 percent in 2026 and 2.1 percent in 2027.
- Russia: 2026 growth revised up by 0.3 percentage point relative to January, to 1.1 percent; projected growth of 1.1 percent in 2027.
- Türkiye: expected growth revised downward by 0.8 percentage point for 2026 to 3.4 percent relative to the figure in the January 2026 WEO Update.

### Inflation Forecast
- Global headline inflation: 4.1 percent in 2025; projected to increase to 4.4 percent in 2026 and fall to 3.7 percent in 2027.
- Revision: 0.7 percentage point upward revision for 2026 from the figure in the October 2025 WEO, reflecting expected higher energy and food prices.
- United States: US core inflation projected to return to the country’s 2 percent target during 2027.
- United Kingdom: inflation in 2025 rose partly because of one-off changes in regulated prices; expected to pick up temporarily toward 4 percent before returning to target by the end of 2027.
- Japan: inflation expected to moderate in 2026 relative to 2025 and converge toward the country’s target by the end of 2027 as food and commodity prices ease.
- Euro area: headline inflation projected to increase temporarily to above 2 percent in 2026 and remain above target in 2027; core inflation expected to increase more modestly but stay above 2 percent until 2028.
- China: inflation projected to start rising from low levels.
- India: inflation expected to return to near target levels after subdued food prices drove a marked decline in 2025.

### World Trade Outlook and Global Imbalances
- World trade volume growth: 5.1 percent in 2025; expected to decline to 2.8 percent in 2026 and increase to 3.8 percent in 2027.
- Exports of goods and services: projected to decline in percent of world GDP over the forecast horizon; decline in services trade is much less pronounced than in goods trade.
- Medium-term: global imbalances expected to decline only modestly.
- Drivers: expansionary fiscal packages in some economies with current account surpluses; continued attraction of capital flows to the United States due to technology-driven business investment surge.
- Projection: US current account deficit expected to remain wider than that observed during the decade preceding the COVID-19 pandemic.
- Contributing factors: sustained large fiscal deficits in the United States and China’s continued reliance on export-led growth and limited rebalancing to domestic consumption.

### Medium-Term Outlook (2028–31)
- Global economy projected to expand at an average annual pace of 3.1 percent in 2028–31.
- Historical comparison: prepandemic (2000–19) historical average was 3.7 percent.
- Main factor: slowdown in China’s growth; average annual growth also expected to slow in several other major Asian economies, the Middle East and Central Asia, sub-Saharan Africa, North America, and Europe.
- Trade fragmentation costs: estimates of long-term global GDP losses from trade fragmentation alone range between 0.3 percent and 7.0 percent after 10 years.

### Risks to the Outlook — Downside (dominant)
- Geopolitical risk effects:
  - A one-standard-deviation increase in geopolitical risk is associated with a decline in real GDP of about 0.8 percent one year after the initial shock.
  - The average geopolitical risk in Europe rose by about 1.2 standard deviations in 2022 and remained elevated at about 0.5 standard deviation in 2025.
  - Roughly 10 percent of the estimated GDP impact can be attributed to the direct effect of higher oil prices.
  - Increased geopolitical risk is associated with a level of prices about 2.5 percent higher relative to the no-shock baseline three years after the shock.
  - The nominal exchange rate depreciates by about 1.8 percent one year after the shock.
- Potential channels and consequences:
  - Volatile commodity prices, disrupted supply chains, exchange rate depreciation, food security threats (including disruptions to fertilizer markets), erosion of real incomes, increasing poverty in commodity-importing countries, external imbalances, and risk of balance of payments distress and social unrest.
  - Capital flow reversals and abrupt asset price adjustments, especially in emerging market economies with weaker policy frameworks and smaller fiscal and external buffers.
  - Surges in military spending may boost activity short-term but distort resource allocation and involve macroeconomic trade-offs.
  - Fiscal vulnerabilities: public debt elevated in several major economies; fiscal sustainability worries could tighten broader financial conditions and amplify financial market volatility and refinancing risk in some high-debt developing economies.
  - Erosion of confidence in economic institutions: political pressure on independent central banks could lift inflation expectations and require prolonged tight monetary policy, raising long-term yields and lowering growth.
  - Planned reductions in official development assistance (ODA) pose challenges for low-income countries; Chinese lending to LIDCs weakened in recent years, with net transfers recently turning negative.

### Risks to the Outlook — Other Downside Scenarios
- Reevaluation of AI-driven productivity gains:
  - If AI-driven profitability projections are overly optimistic, real investment in technology sectors could drop sharply.
  - Equity markets concentrated in technology sectors could undergo sharp repricing, potentially slowing private consumption via negative wealth effects and triggering tighter global financial conditions.
- Disruption of trade policies:
  - Increased protectionism, additional tariffs, and nontariff measures targeting critical inputs could weigh on global growth and create supply bottlenecks, with amplified effects if actions trigger retaliation.
- Repricing of borrowing costs:
  - Fiscal vulnerabilities could trigger higher borrowing costs, tightening financial conditions, and refinancing risk for some developing economies.
- Erosion of confidence in institutions:
  - Weaker public confidence in policy institutions could reanchor expectations only after prolonged tight monetary policy, raising funding costs and prompting capital outflows.

### Upside Risk
- Sooner materialization of AI productivity gains:
  - The reference forecast does not include direct effects of AI on productivity given modest adoption rates in many sectors.
  - AI adoption could lift global growth by as much as 0.3 percentage point in the near term and by 0.1–0.8 percentage point in the medium term if productivity gains materialize and benefits are widely shared.

*CHAPTER 1 GLOBAL PROSPECTS AND POLICIES — International Monetary Fund | April 2026.*

### CHAPTER 1 GLObAL PROSPECTS AND POLICIES

### CHAPTER 1 GLObAL PROSPECTS AND POLICIES

### Opportunities and structural reforms
- Transformational technology changes (notably AI) can raise productivity and potential output if complementary policies are in place.
- Structural reforms recommended to lift growth potential and resilience:
  - Upskill the existing labor force and reduce barriers to labor mobility.
  - Streamline and rationalize business regulations, reduce internal trade barriers, enhance competition, and promote innovation.
  - Scenario C in Box 1.3 suggests a package of reforms across major economies would lift near-term global growth by more than half a percentage point.
- Complementary public policies to capture technology gains:
  - Scale up energy and digital infrastructure.
  - Implement labor market programs to manage workforce transitions.
  - In low-income countries, close gaps in energy and digital infrastructure and reduce labor concentration in sectors (agriculture, mining) where AI-driven productivity gains are likely limited.

### Trade, investment, and multilateral cooperation
- Progress in trade talks and enhanced policy predictability can lower tariffs, support activity, and unlock investment.
- Gains could be larger if cooperation extends beyond tariffs to services trade, foreign direct investment, and international taxation.
- A broad reduction in US tariffs and reduction in uncertainty could lift global growth by 0.6 percentage point (see scenario C in Box 1.3).
- Trade-policy guidance:
  - Modernize trade rules to reflect structural shifts (growing share of services) and align with job growth, green transition, and supply-chain resilience.
  - Avoid discriminatory or distortive arrangements (purchase commitments, quantitative restrictions) and avoid export controls that exacerbate supply disruptions.
  - Negotiations should aim to reduce frictions, remain open to new participants, and avoid provisions that raise barriers to third parties.

### Managing the immediate shock — monetary and financial stability
- Policy trade-offs: balance fighting inflation and preserving growth; support vulnerable groups while rebuilding fiscal buffers.
- Monetary policy guidance:
  - Central banks should be ready to act decisively in line with mandates and preserve price stability.
  - Policy should be attuned to spillovers from actual inflation to inflation expectations, especially over the medium- to long-term horizon.
  - Where monetary policy was already properly calibrated before the shock, policymakers may have the option to wait to discern the duration and impact of the shock.
  - Where negative demand shocks lower activity below potential, reduction in policy rates may be appropriate only if risks to price stability remain contained.
  - In non-inflation-targeting economies (e.g., fixed exchange rate regimes), reliance may fall more heavily on fiscal policy.
- Communication and credibility:
  - Central banks should deliver clear, timely, and consistent communication, articulating commitment to mandates and resolve not to allow inflation expectations to de-anchor.
  - Safeguard legal and operational central bank independence to anchor expectations and protect against fiscal dominance.
- Exchange rate and market interventions:
  - Exchange rates should generally move flexibly; temporary FX intervention or targeted capital flow measures may be warranted in select cases alongside appropriate monetary and fiscal stances.
- Prudential oversight:
  - Strengthen prudential oversight, conduct scenario analysis on hostilities in the Middle East, curb risk taking in nonbank financial institutions, preserve liquidity, capital, and international reserve buffers.

### Fiscal policy, protecting the vulnerable, and debt sustainability
- Fiscal responses to commodity price shocks should:
  - Limit distortion of price signals and keep fiscal-monetary mix consistent with price stability.
  - Be cautiously used: temporary fiscal measures (subsidies, tax cuts, price caps) can be appropriate under an exceptional set of conditions, but discretionary fiscal support should typically be avoided.
  - If support is unavoidable, it should be timely, explicitly temporary, tightly targeted to the most vulnerable, include clear sunset clauses, and have identified offsets through reduced nonpriority spending or new revenue measures.
- For economies with windfalls from commodity price swings, maintain fiscal discipline and use gains within a coherent medium-term fiscal framework with debt sustainability at its core.
- Replenishing buffers:
  - Rebuild fiscal buffers given high public debt levels and eroded fiscal space.
  - Credible medium-term fiscal consolidation should be grounded in realistic assessments of long-term spending pressures and focus on growth-friendly adjustment.
  - Avoid dependence on financial repression, monetary financing, or benign market sentiment.
  - Strengthen revenues through base broadening and improved tax administration, enhance spending efficiency, and reorient expenditures toward high-multiplier areas (infrastructure, skills development, well-targeted social protection) while crowding in private investment.
  - Strengthen fiscal frameworks, credible fiscal rules, independent fiscal institutions, and prudent debt management.
  - High-debt countries may need to limit state-financed services, better target social spending, and integrate interest payment risks into fiscal planning.
  - High-debt low-income countries facing refinancing and rollover risks may require international cooperation, timely concessional financing, and debt resolution.

### Policies to promote medium-term growth and labor market resilience
- Mobilizing labor:
  - Raise labor utilization and job creation to ease macroeconomic trade-offs and support fiscal sustainability.
  - Labor market institutions should promote mobility and increase matching efficiency; portable benefits, affordable childcare, parental leave can raise participation (particularly among women).
  - Pension and retirement systems should support older workers with flexibility and actuarially fair incentives, including voluntary part-time work and gradual retirement options.
  - Migration policies aligned with domestic skill shortages can alleviate bottlenecks while safeguarding domestic workers.
- Implementing smarter regulation:
  - Reduce inefficient regulations via well-targeted, carefully sequenced deregulation to promote competition, broaden access to finance, and improve capital allocation.
  - Avoid undermining prudential standards or macrofinancial stability; uncoordinated reforms could heighten vulnerabilities.
- Harnessing technological progress:
  - Complement AI and digital adoption with investments in skills, energy, and digital infrastructure; competitive markets; robust data governance and cybersecurity.
  - Encourage diffusion and adoption of new technologies alongside traditional R&D support; use competition and product market reforms to reallocate resources to more productive firms.
  - Prefer targeted, time-bound adjustment assistance (training, relocation support, wage insurance) over open-ended protectionist measures when shocks are concentrated.
- Fostering energy transition:
  - Accelerate adoption of renewable and energy-efficient systems to contain energy-price impacts, improve energy security, advance climate mitigation goals, and prepare for climate-related extreme weather risks.
- Addressing domestic imbalances:
  - Correct domestic imbalances to support sustainable growth and reduce global imbalances.
  - Country-specific guidance examples:
    - China: progress toward a more consumption-led model to narrow external surpluses; near-term fiscal support to boost household consumption and stabilize the property sector; medium-term address local government debt overhang.
    - United States: credible fiscal consolidation to moderate demand pressures and limit global spillovers.
    - EU: deepen the single market and implement growth-enhancing reforms to stimulate private investment.

### International cooperation, refugee support, and sovereign debt resolution
- International cooperation is essential to address immediate threats from the Middle East conflict and longer-term challenges.
- Refugee inflows should be supported by adequately funded integration measures with strong international contributions, not left solely to host countries lacking fiscal space.
- Emergency liquidity (including IMF facilities) is a crucial backstop; for countries at risk of debt distress, timely and orderly debt resolution is required.
- Continue operationalizing sovereign debt resolution mechanisms (including the G20 Common Framework) and converge practices via the Global Sovereign Debt Roundtable to make restructurings more predictable and less costly.

### Retrospective on April 2025 projections and 2025 outcomes
- April 2025 WEO reference forecast (information up to April 4, 2025) incorporated factors that reduced projected global growth by 0.6 percentage point in 2025.
  - That forecast included a rise in the statutory US tariff rate to about 25 percent, alongside countermeasures from Canada and China, and increased trade policy uncertainty.
- Actual 2025 outcomes and tailwinds:
  - Global GDP growth in 2025 was 3.4 percent, 0.6 percentage point stronger than expected.
  - The April 2025 WEO projection had expected global growth of 2.8 percent in 2025.
  - Factors that reduced the downside relative to April 2025 projections:
    - Reduced impact of tariffs: the effective statutory tariff rate was reduced to about 18 percent by the end of the year; the actual collected tariff rate was about half the announced rate in December 2025.
    - Accommodative financial conditions: equity prices rose and sovereign spreads narrowed in many emerging markets.
    - The US dollar depreciated by 6   percent between April 1 and the end of December, providing near-term monetary policy space and strengthening balance sheets in emerging market and developing economies.
    - Front-loading of foreign goods purchases by US firms and households in early 2025 provided a small temporary boost to activity in some economies.
    - Tailwinds also included fiscal policy, financial conditions, and AI investment.

*International Monetary Fund | April 2026*

### Box 1.1. Explaining the Resilience of Global Growth in 2025

### Box 1.1. Explaining the Resilience of Global Growth in 2025

### Drivers of resilience in 2025
- Fiscal support
  - The United States passed the One Big Beautiful Bill Act in July 2025, which renewed expiring provisions in the 2017 Tax Cuts and Jobs Act and provided support to activity in 2025.
- Investment in artificial intelligence
  - Technology investment related to AI added an estimated 0.5 percentage point to US GDP growth in 2025.
  - The import‑intensive nature of this investment implied large spillovers to some parts of the world, notably Asia.
  - Estimates of the boost from AI since April 2025 do not include an impact on general productivity from the adoption of AI by other businesses.
- Exchange rate and trade effects
  - A weaker US dollar historically is associated with stronger GDP growth in emerging markets (see Figure 1.1.2).
  - Boosted competitiveness in economies with currencies pegged or closely linked to the US dollar.
- Net tally
  - Together, these factors added an estimated 0.6 percentage point to global growth in 2025, close to the upward revision in the latest forecasts compared with those in the April 2025 WEO.
  - About a quarter of the gain came from a lower-than-expected impact of tariffs; the remainder came from other tailwinds.
  - These factors offset the headwinds incorporated in the April 2025 WEO, with the total impact close to zero.
  - The total is somewhat below the upward revision of 0.2 percentage point to the growth forecast compared with that in the October 2024 WEO.

### US productivity and the role of AI
- Historical and recent productivity
  - Growth in output per hour worked in the United States averaged 2.2 percent every year since 2020 compared with a 1.5 percent annual pace over the previous business cycle (2009–19).
- Possible drivers of stronger productivity
  - Investment in labor‑saving technologies during pandemic-era labor shortages.
  - Reallocation of labor across sectors and increased flexibility to work remotely.
  - Surge in new business formation during the pandemic changing business composition toward more innovative and more productive types.
  - Fiscal policy support for investment in infrastructure and increased tax incentives for private investment.
- Measurement caveats
  - Compositional issues (for example, removal of lower-wage workers from the workforce) and temporary cyclical factors (for example, increased capacity utilization) could generate noise and significant revisions to past data.
  - It may be too early for benefits of AI adoption to show up materially in aggregate data; AI correlates with faster productivity growth across sectors but explains little of the aggregate gain in productivity to date.

### Services trade: evolving patterns and implications (Box 1.2)
- Long-run expansion
  - Between 1985 and 2024, services exports as a share of world GDP expanded by 150 percent, compared with 60 percent for exports of goods.
  - Goods still account for more than 70 percent of global trade.
- Geography and distance
  - A gravity model explains about 63 percent of the variation in goods trade patterns in 2019.
  - The distance elasticity for services trade changed from a 0.63 percent decline in bilateral trade per 1 percent increase in distance in the early 2000s to a 0.52 percent decline in 2022–23.
- Composition shift
  - Transportation and travel fell from about 70 percent of services trade in 2000 to less than 40 percent in 2023.
  - Recent growth has come from “modern services”—primarily financial, information technology (IT), and business services in broadly equal measure.
- Resilience to geopolitical tensions
  - Geopolitical distance adversely affects bilateral goods trade intensity, and this effect has intensified since 2016; there is no similar trend for aggregate services trade.
  - Some modern services (notably IT and intellectual property licensing) show some sensitivity to geopolitical alignment, but aggregate services trade remains largely unaffected.
- Opportunities and barriers for emerging markets
  - Services have accounted for two‑thirds of GDP growth in emerging markets over the past three decades, but growth has been domestic rather than export led.
  - Services trade is more concentrated among advanced economies; many emerging markets remain peripheral to global services flows.
  - Realizing gains from services trade requires addressing barriers related to infrastructure, skills, and behind‑the‑border regulatory barriers (restrictions on foreign ownership, licensing requirements, local‑presence requirements, and regulatory standards).
  - Multilateral, bilateral, and regional integration, plus investments in digital infrastructure and skills, can help capture gains.

### Forecast uncertainty and risk assessment (Box 1.3)
- Confidence bands and probabilities (G20 model)
  - Probability that a recession will occur in 2026 (annual growth rate below 1 percent): about 35 percent (October 2025 WEO estimate: 30 percent).
  - Probability that 2026 US headline inflation will rise above 4 percent: about 33 percent (October 2025: 17 percent).
  - Probability that global growth in 2026 will fall below 2 percent: 25 percent.
  - Probability that 2026 global headline inflation will rise above 5 percent: 38 percent (previously 25 percent).
- Modeling notes
  - G20 model distributions are generated by drawing on shocks recovered from historical data and oversampling years with negative shocks to growth.
  - The exercise gives prominence to historical oil price episodes of the 1970s.

### Scenario designs and key parameter values (GIMF and G20-based scenarios)
- General assumptions
  - Monetary policy responds endogenously, with floating exchange rates in most regions.
  - In scenarios A and B, China’s currency adjustment is limited; in scenario C, the renminbi adjusts flexibly.
  - Automatic stabilizers operate on the fiscal side.

- Scenario A: The Divide Widens (AI-driven surge concentrated in the United States; rising tariffs)
  - US investment
    - Investment rises 5 percent above the reference forecast by 2030 and stays 2 percent higher beyond that.
    - US investment increases by 2–4 percent in 2026–27; a large part of the impulse goes to imports (2–3 percent).
  - China
    - Subsidies for employment in the tradables sector gradually increase by 4 percent of GDP over the WEO horizon, offset by lower transfers to households.
    - Subsidies result in a gradual loss of productivity in the tradables sector (0.5 percent).
  - Euro area productivity
    - Total factor productivity growth in the euro area is 0.1 percentage point lower per year over five years, relative to the reference forecast.
    - Investment‑specific productivity growth declines by 0.05 percentage point per year over the same period.
    - Productivity growth returns to the reference level after 2030, but the effect on productivity is permanent.
  - Saving and tariffs
    - Private saving rate rises by 1 percentage point by 2030.
    - Starting in mid‑2026, China, the euro area, and the United States permanently impose additional tariffs of 20 percentage points on all trade among them.
  - Macro outcomes
    - US GDP increases by 0.2 percent relative to the reference forecast in 2026 (0.5 percent in 2027).
    - Global output rises by 0.3 percent in 2026–27.
    - Emerging Asia output increases by 0.3–0.4 percent.
    - The dollar depreciates in real and nominal terms (about 3 percent).
    - US inflation rises modestly, by 10–20 basis points.
    - Increase in the federal funds rate is less than 25 basis points by 2027.

- Scenario B: AI Disappoints, Risk Off Ensues (AI reappraisal, asset price correction, tighter financial conditions)
  - Investment and asset prices
    - Total investment falls by 3 percent in 2026 relative to the reference forecast.
    - Equity prices in the United States fall by 20 percent in 2026.
    - Equities outside the United States fall by 15 percent.
  - Financial conditions
    - Corporate risk premiums temporarily rise by 75 basis points in the United States, 50 basis points in other advanced economies and China, and 75–100 basis points in other emerging markets.
    - Term premiums increase by 30–50 basis points in advanced economies and 75–100 basis points in emerging markets.
    - Shock is concentrated in the United States and puts downward pressure on the US dollar.
    - Shocks are assumed to fade over the WEO horizon.

- Scenario C: Reforms Reset Economies (policy reforms in China, euro area, and the United States; trade policy reset)
  - China
    - Short‑term fiscal expansion of about 0.5 percent of GDP, including higher social spending that reduces the saving rate and supports residential investment, followed by gradual consolidation.
    - Industrial policy support is cut in half and coupled with efforts to increase business dynamism.
  - Euro area
    - Public investment increases to 1 percent of GDP by 2027, stays at that level until 2030, and remains permanently higher by 0.4 percent thereafter.
    - Over the WEO horizon, about two‑thirds of the surge in spending is financed by higher deficits; from 2030 onward, reallocation returns debt ratios toward reference levels.
    - Further progress toward the Capital Market Union results in a permanent reduction in corporate financing costs of 25 basis points.
  - United States
    - Fiscal reforms reduce inefficiencies from poorly targeted tax expenditures, shift from labor to consumption taxes, contain health care costs, and permanently reduce government consumption.
    - Term premium reduced by 50 basis points starting in 2026.
    - Overall fiscal deficit gradually decreases by 1 percent of GDP after five years.
  - Trade policy
    - Tariffs imposed since January 2025 are permanently removed, reducing effective tariff rates on US imports by about 10 percentage points relative to the reference forecast.
    - Trading partners also remove tariffs on US exports; US exports to China see a decrease in effective tariff rates of about 10 percentage points.
    - Greater predictability reduces uncertainty by about the absolute size of the 2018–19 spike in the global economic policy uncertainty measure.

*The authors of Box 1.1 are Nan Li and Robert Zymek. The authors of Box 1.3 are Jared Bebee, Benjamin Carton, Chris Jackson, Gene Kindberg‑Hanlon, Dirk Muir, Rafael Portillo, Pedro Rodriguez, Philippe Wingender, and Rachel Zhang.*

*Source: Box 1.1, Box 1.2, and Box 1.3, Chapter 1, World Economic Outlook: Global Economy in the Shadow of War (April 2026).*

### 1. United States

### 1. United States

### Scenario B — AI correction, financial tightening, term premium and US dollar shock
- AI correction causes a decrease in US investment of 3–4 percent in 2026–27.
- Direct GDP impact: GDP decreases by 0.3 percent in 2026 and 0.6 percent in 2027, relative to the reference forecast.
- Wealth effects from lower asset prices lead to a decrease in US consumption of 1 percent of GDP in 2026.
- Global investment declines by about 1.5 percent, with the United States and emerging markets experiencing larger declines.
- The AI-correction investment layer subtracts 0.6–0.7 percent from global output in 2026–27.
- Higher term premiums subtract 0.3 percent from global GDP in 2026.
- Lower demand for US assets leads to a depreciation of the US dollar by 6 percent in nominal effective terms.
  - The dollar depreciation supports external demand for US exports but also adds to tightening in US financial conditions.
  - The positive effect of net exports slightly dominates for US GDP.
- Combined effect (Scenario B): a large decrease in US GDP of 1.5 percent in 2026, relative to the reference forecast.
- Global and regional spillovers:
  - Activity in the euro area declines by 1 percent.
  - The impact on China is milder, 0.3 percent.
  - Global activity is 1.2 percent lower.
- External balances:
  - The US current account balance increases (its deficit decreases) by about 1 percent of GDP.
  - Current account surpluses in China and the euro area decrease (China’s immediate impact mitigated by temporary real depreciation of the renminbi).

### Scenario C — China, euro area, and US reforms plus tariff rollback
- US fiscal reforms:
  - Reduce US public debt by 25 percent of GDP over the long term.
  - The combination of growth-friendly measures and lower premiums lifts US GDP by 0.7 percent in 2026–27.
  - Inflation net of tax effects is slightly higher, and policy rates are slightly higher.
  - Lower fiscal deficits contribute to a decrease in the US current account balance.
- Tariff rollback and reduced uncertainty:
  - Raise global GDP by 0.6 percent in 2026, with effects broadly similar across countries.
- Combined effect (Scenario C):
  - Increase in global output of 1.2 percent by 2026.
  - Increase in global output of 1.5 percent in the long term.
  - Reduction in global imbalances.

### Key statistics and trajectories for the United States (from scenarios)
- US investment fall under AI correction: 3–4 percent in 2026–27.
- US GDP deviation under AI correction: −0.3 percent (2026), −0.6 percent (2027) relative to reference.
- Combined Scenario B US GDP deviation: −1.5 percent in 2026 relative to reference.
- US consumption decline from wealth effects: 1 percent of GDP in 2026.
- Global investment decline linked to Scenario B: about 1.5 percent.
- Global GDP impact of term premium increase: −0.3 percent in 2026.
- US dollar nominal effective depreciation under Scenario B: 6 percent.
- US GDP gain from fiscal reform (Scenario C): 0.7 percent in 2026–27.
- Long-term public debt reduction from US fiscal reform: 25 percent of GDP.
- Global GDP changes under Scenario C: +1.2 percent by 2026; +1.5 percent in the long term.

*Source: IMF staff estimates (excerpt from Box 1.3, World Economic Outlook: Global Prospects and Policies).*

### 1. Commodity Prices

### 1. Commodity Prices

### Foundations: Rare Earths Market Structure
- REEs are a group of 17 chemically similar metals, typically divided into light rare earth elements (LREEs) and heavy rare earth elements (HREEs).
- Key properties: exceptional magnetism and catalytic enhancement; essential inputs for automotive manufacturing (especially electric vehicles), renewable energy, oil refineries, defense systems, semiconductors, and consumer electronics.
- Most important application: permanent magnets (invented in 1983 by General Motors), combining as many as four REEs with iron and boron; central to the clean energy transition and advanced manufacturing.
- Market size (2024):
  - Rare earth oxides (REOs) valued at about $6 billion.
  - Permanent magnets valued at approximately $25 billion (Market Data Forecast 2025).
- Value concentration:
  - The “magnet-4” elements—neodymium, praseodymium (LREEs), terbium, dysprosium (HREEs)—jointly comprise 96 percent of the total REO market value despite representing only 23 percent of REO production by weight.
- Supply chain stages: mining → concentration → separation (solvent-based extraction; hundreds of sequential processing steps; pollution-intensive) → refining to metals or alloys → downstream manufacturers (including permanent magnet producers).
- Barriers to rapid diversification of separation and refining capacity: billions in capital investment, years of regulatory approval, and specialized technical expertise.
- China's role and concentration (varies by stage and element):
  - LREE mining: China’s share of global output fell from 97 percent at its peak in 2010 to 58 percent in 2024.
  - China maintains 88 percent of the world’s oxide separation capacity and 93 percent of its metal refining (LREEs).
  - HREEs: China retains near monopoly across the global supply chain—98 percent of mining (including mining out of Myanmar), 97 percent of oxide separation, 95 percent of metal refining, and 90 percent of permanent magnet production (Bedford 2025).
- Substitutability:
  - HREEs score 78 out of 100 on a substitutability index (100 indicates no adequate substitute exists), compared with 57 for non-REEs (Graedel and others 2015).
  - Substitutes often exist but typically with penalties in efficiency, weight, size, or cost; substitutability for HREEs is significantly weaker.

### Macroeconomic Impact of Supply Disruptions
- Context: China introduced a special licensing requirement—mainly for HREEs and related products, including permanent magnets—on April 4, 2025, causing a sharp global slowdown in permanent magnet exports between April and June 2025.
  - Exports of these magnets had fallen about 70 percent year over year as of May 2025.
  - Exports returned to positive trend with double-digit year-over-year growth rates in subsequent months.
  - October 2025: China tightened REE licensing requirements; suspended in November under a China-US agreement; January 2026: China restricted HREE exports to Japan. Strong REE export growth continued in January and February 2026.
- Value added at risk (VAAR) estimates (2017 data, US Geological Survey and OECD I-O mapping):
  - The 34 of 405 US sectors using rare earths jointly added $233 billion in goods and services value in 2017, equivalent to 0.8 percent of nominal GDP.
  - Country VAAR value-added shares:
    - United States: 0.8 percent
    - France: 0.4 percent
    - Germany: 2.5 percent
    - India: 1.3 percent
    - Japan: 1.7 percent
    - United Kingdom: 0.6 percent
  - In the United States, permanent magnets drive about 70 percent of VAAR.
- Limitations of VAAR: Omits substitution possibilities and cascading input-output effects; may overstate losses by assuming no substitution, and understate by abstracting from cascading I-O effects.
- Model for GDP loss estimation:
  - A small open economy model with network linkages (Silva and others 2024, extended to incorporate imported REE supply constraints) calibrated using an REE-augmented I-O table and US Geological Survey data.
  - Scenario: persistent 80 percent reduction in all rare earth inputs (oxides, metals, compounds, and magnets) consistent with average single-supplier import concentration of advanced economies.
- Model simulation results (output losses by country; percent of GDP):
  - Low substitution elasticity (short horizon; limited replacement; elasticity = 0.015):
    - United States: GDP decline of 1.5 percent (almost twice the VAAR measure).
    - Germany: GDP decline of about 1.2 percent (VAAR = 2.5 percent).
  - High substitution elasticity (longer horizon; greater adjustment; elasticity = 0.8):
    - Average estimated GDP losses are negligible, averaging only 0.006 percent.
- Drivers of differences across countries: network amplification and forward linkages—US REE-intensive sectors have stronger forward linkages (motor vehicles, electrical equipment, computers and electronics) relative to Germany.

### Coping with Risks of Supply Disruptions
- Main adaptation strategies observed:
  - Stockpiling: short-term buffer; may deter coercion; does not address structural dependence; constrained in practice.
  - Recycling: longer-term promise; not yet a primary supply source in a rapidly expanding market.
  - Substitution: inferior alternatives exist but unlikely to deliver large-scale replacement for permanent magnets in the near term.
  - Reshoring and import diversification: main medium-term responses; viability constrained by long development timelines, coordination challenges, and potential skilled labor shortages.
- Policy responses following April 2025 licensing:
  - Price floors and offtake agreements to provide investment certainty because many REE projects are not commercially viable at current neodymium prices (about $55 per kilogram; see Online Annex Figure 1.1.1).
    - Example: July 2025 agreement between the US government and MP Materials included a price protection mechanism akin to a floor.
  - Direct government financial support: equity stakes, loans, and grants to supply capital and signal long-term commitment.
    - The July 2025 MP Materials deal included substantial equity and loan components.
    - January 2026 agreement between the US Department of Commerce and USA Rare Earth combines government equity, below-market lending, and direct federal funding (grants).
  - International coordination and joint financing:
    - October 2025 agreements between the United States and Australia, Japan, Malaysia, and Thailand; G7 Critical Minerals Action Plan promotes joint financing and coordinated procurement.
    - Mobilized estimated $6.4 billion in public and private funding to de-risk REE supply chains.
  - Effect: These measures improved financial prospects of publicly listed firms in the industry (Figure 1.SF.7).

### Quantifying the Impact of Industrial Policies to De-risk Rare Earth Supply Chains
- Policy framing: De-risking should be viewed as insurance—balance efficiency losses in normal times against expected disruption losses in crises; emphasize de-risking rather than decoupling.
- Dynamic trade model for global rare earth market:
  - Producers in different countries invest in extraction and processing capacity to produce raw and processed REEs.
  - Calibration draws on detailed market, industry, and geological data.
- Policy instruments analyzed: investment subsidies and price floors applied to oxide separation (the most crucial processing stage).
- Implementation scenarios:
  - Unilateral action (example: US-based producers).
  - Simultaneous action among all importer countries.
- Policy target and calibration:
  - Policies calibrated to achieve 25 percent self-sufficiency in rare earth processing by 2035 in the US—15 percentage points higher than the comparable figure in the baseline with unchanged policies and in line with International Energy Agency projections (IEA 2025).
- Preliminary conclusion: sizable interventions are required to attain the 25 percent self-sufficiency target; in the unilateral scenario, the investment subsidy must cover [text truncated at this point in the source].

*Source: IMF, World Economic Outlook, April 2026, Special Feature "Market Developments and the Economics of Rare Earths" (chapter excerpt).*

### 77.2 percent of total investment costs for the US to

### ch1 - 77.2 percent of total investment costs for the US to

### Security benefits and self-sufficiency trade-offs
- Security benefits may exhibit diminishing returns, with the first 10–20 percent increase in self-sufficiency delivering the largest reduction in vulnerability.
- Modest self-sufficiency rates can substantially reduce vulnerability to supply disruptions at minimal efficiency costs (Clayton, Maggiori, and Schreger 2024).
- US self-sufficiency is defined here as the share of domestic rare earth consumption supplied either by domestic production or by imports from countries other than China (through friend-shoring).
- See Online Annex 1.1, Part III, for an analysis of a more ambitious 50 percent self-sufficiency target.

### Market events and industry sample
- Key timeline events:
  - April 9: China imposes REE export restrictions
  - June 11: US and China strike trade deal
  - July 10: US DoD invests in US rare earth producer MP Materials
  - October 9: China expands REE export restrictions
- Aggregate stock market sample construction:
  - Initial screen yields 315 firms from S&P Capital IQ keyword searches.
  - Manual review retains only those with active involvement in rare earth extraction, processing, or project development.
  - Final sample: 89 companies (operating, publicly listed, primary locations outside China).

### Policy instruments evaluated and their relative effects
- Price floors:
  - Currently being discussed among Group of Seven policymakers.
  - Price floor required for unilateral scenario: 2.4 times the period market price for the unilateral scenario (noting further price-floor implementations specified as 2.42 times and 2.2 times below).
  - Price floors generate windfall gains for incumbent producers by supporting existing production.
- Investment subsidies:
  - Proxy for a broad class of capital expenditure support measures used in practice, including grants and below-market lending.
  - Target expansion of new capacity (more fiscally efficient in present-value terms than price floors).
  - More costly in the short term because they front-load fiscal outlays; costs decline in the long term as investment shifts to replacing depreciated capital.
- Comparative implementations noted in Figure 1.SF.8 (notes):
  - Investment subsidy to US refiners only implemented with a 77.2 percent subsidy.
  - Investment subsidy to refiners outside China only implemented with a 77.8 percent subsidy.
  - Price floor subsidy to US refiners only implemented with a price floor 2.42 times the period market price.
  - Price floor subsidy to refiners outside China implemented with a price floor 2.2 times the period market price.
- Baseline scenario assumptions:
  - 4.7 percent global demand growth in 2025–29.
  - 1.42 percent global demand growth in 2030–34.

### Fiscal costs and scenarios to reach 25 percent US REE self-sufficiency by 2035
- Large policy interventions required to reach 25 percent self-sufficiency by 2035, reflecting Chinese producers’ relative efficiency and price effects from boosting production in a well-supplied market.
- Investment subsidy fiscal costs under unilateral scenario:
  - US fiscal costs associated with the investment subsidy over the first decade amount to 141 percent of the annual US market size—equivalent to about $1.19 billion ($0.81 billion).
- Global REEs’ market size and US share:
  - Global REEs’ market size is about $6 billion.
  - The US share is 14 percent, so roughly $0.81 billion.
- Simultaneous action:
  - When all importing economies incentivize investment in refining, US self-sufficiency is achieved through a less concentrated buildup of capacity and with lower US fiscal cost because part of the fiscal cost is outsourced to incentivizing economies.
  - Simultaneous action allows other economies to leverage higher US efficiency in REE processing and experience substantial gains in self-sufficiency at comparatively lower fiscal costs.

### Conclusions and policy recommendations
- Large disruptions to REE supplies could substantially reduce GDP in many economies, particularly in the short term when substitution options are limited.
- Avoiding trade tensions and restrictions remains the first-best outcome to promote steady REE supply.
- Model-based analysis suggests that de-risking supply chains through targeted industrial policies is fiscally costly.
- Costs are lower if de-risking is pursued by various importers simultaneously and if policy instruments directly target the expansion of new production capacity.
- IMF research also suggests that industrial policies should be used cautiously (Baquie and others 2025).
- Complementary structural reforms recommended:
  - Simpler mining permits to lower barriers to entry into REE markets.
  - Investment in specialized skills the sector requires—from separation chemistry to metallurgy.
  - Competitive allocation of subsidies.

*Source: WORLD ECONOMIC OUTLOOK: GLOBAL ECONOMY IN THE SHADOW OF WAR, Chapter 1 (April 2026), IMF staff calculations and accompanying notes.*

### Annex Table 1.1.6. Summary of World Real per Capita Output

### Annex Table 1.1.6. Summary of World Real per Capita Output

### Overview
- Annual percent change; in constant 2021 international dollars at purchasing power parity.
- Columns correspond to: 2008–17 average, 2018, 2019, 2020, 2021, 2022, 2023, 2024, 2025, 2026, 2027 (projections).

### World and Major Groups
- World: 1.8, 2.5, 1.8, –3.9, 5.7, 2.8, 2.3, 2.4, 2.5, 2.7, 2.3
- Advanced Economies: 0.8, 1.9, 1.5, –4.4, 6.0, 2.5, 0.9, 1.2, 1.6, 1.6, 1.5
- Emerging Market and Developing Economies: 3.3, 3.3, 2.5, –3.2, 5.9, 3.2, 3.4, 3.4, 3.4, 3.4, 3.1
- Emerging and Developing Asia: 6.1, 5.6, 4.5, –1.3, 7.1, 4.1, 5.0, 4.9, 5.0, 4.4, 4.3
- Emerging Market and Middle-Income Economies: 3.6, 3.7, 2.7, –2.9, 6.6, 3.5, 3.8, 3.8, 3.7, 3.1, 3.4
- Low-Income Developing Countries: 2.7, 2.2, 2.2, –3.8, 1.4, 2.7, 1.8, 1.8, 2.5, 4.3, 2.7

### Advanced Economies — Selected Economies and Groups
- United States: 0.8, 2.4, 2.1, –2.9, 5.8, 2.0, 2.1, 1.9, 1.5, 2.0, 1.8
- Euro Area (sum of individual euro area countries): 0.4, 1.6, 1.4, –6.3, 6.5, 3.4, –0.1, 0.6, 1.1, 0.9, 1.0
- Germany: 1.1, 1.0, 0.9, –4.0, 4.1, 1.1, –1.8, –0.8, 0.2, 0.8, 1.2
- France: 0.3, 1.3, 1.7, –7.9, 6.4, 2.2, 1.1, 0.8, 0.6, 0.6, 0.6
- Italy: –0.8, 1.0, 0.6, –8.6, 9.7, 5.2, 1.0, 0.8, 0.6, 0.6, 0.6
- Spain: 0.1, 1.8, 1.1, –11.1, 6.5, 5.0, 1.3, 2.5, 1.4, 0.9, 0.8
- Japan: 0.6, 1.0, –0.1, –4.0, 3.9, 1.7, 1.2, 0.2, 1.7, 1.2, 1.2
- United Kingdom: 0.5, 1.1, 0.7, –10.2, 8.2, 4.1, –1.0, 0.0, 1.0, 0.3, 0.9
- Canada: 0.5, 1.3, 0.4, –6.1, 5.3, 2.9, –0.8, –0.9, 0.6, 1.6, 1.8
- Other Advanced Economies (excludes G7 and euro area countries): 1.7, 2.1, 1.3, –2.1, 6.0, 2.0, 0.6, 1.8, 2.6, 2.2, 1.8

### Emerging Markets and Regions — Selected Economies
- China: 7.7, 6.4, 5.7, 2.2, 8.5, 3.2, 5.5, 5.1, 5.2, 4.6, 4.3
- India (see country-specific notes): 5.3, 5.3, 2.8, –6.7, 8.8, 6.8, 6.3, 6.1, 6.7, 5.6, 5.6
- Emerging and Developing Europe: 1.8, 3.4, 2.4, –1.9, 7.6, 1.7, 3.8, 4.3, 2.4, 2.4, 2.1
- Russia: 1.0, 2.6, 2.1, –2.5, 6.3, –1.3, 4.2, 5.4, 1.6, 1.5, 1.3
- Latin America and the Caribbean: 0.8, 0.2, –0.9, –8.0, 6.7, 3.6, 1.5, 1.6, 1.6, 1.6, 2.0
- Brazil: 0.8, 1.1, 0.6, –3.9, 4.3, 2.6, 2.8, 3.0, 1.9, 1.6, 1.6
- Mexico: 0.3, 1.0, –1.3, –9.1, 5.4, 2.9, 2.2, 0.5, –0.3, 0.9, 1.4
- Middle East and Central Asia: 1.1, 0.8, 0.3, –4.4, 3.0, 4.2, 0.5, 0.8, 1.8, 4.4, 2.8
- Saudi Arabia: 0.5, 5.9, 2.1, –8.3, 9.2, 7.2, –4.0, –2.0, 2.5, 1.1, 2.4
- Sub-Saharan Africa: 1.5, 0.5, 0.3, –5.7, 1.4, 1.9, 1.3, 1.5, 1.9, 1.8, 1.9
- Nigeria (see country-specific notes): 2.1, –0.4, 0.0, –8.3, –1.0, 2.2, 1.2, 1.9, 1.9, 1.9, 2.2
- South Africa: 0.2, 0.1, –1.2, –7.4, 3.9, 1.0, –0.4, –0.7, –0.1, –0.3, –0.1

### Memorandum Groups
- European Union: 0.7, 2.1, 1.8, –5.7, 6.7, 3.4, 0.0, 0.9, 1.4, 1.2, 1.3
- ASEAN-5 (Indonesia, Malaysia, the Philippines, Singapore, Thailand): 3.5, 3.8, 3.2, –5.5, 3.4, 4.6, 3.1, 3.9, 3.6, 3.2, 3.5
- Middle East and North Africa: 0.7, 0.3, –0.1, –4.6, 3.1, 4.5, 0.5, 0.3, 1.6, –0.8, 2.9

*Source: IMF staff estimates.*

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_Source: https://www.imf.org/-/media/files/publications/weo/2026/april/english/ch1.pdf_