## EXECUTIVE SUMMARY

## Source details

**Canonical URL:** [EXECUTIVE SUMMARY](https://www.imf.org/-/media/files/publications/weo/2026/april/english/execsum.pdf)

## Other formats

- [Markdown version](/-/media/files/publications/weo/2026/april/english/execsum.pdf.md)
- [Structured JSON version](/-/media/files/publications/weo/2026/april/english/execsum.pdf.json)

---

### Global outlook and reference forecast
- The WEO presents a “reference forecast” predicated on the assumption that the war in the Middle East will have limited duration, intensity, and scope, such that the disruptions will fade by mid-2026, consistent with commodity futures prices as of March 10.
- Under the reference forecast:
  - Global growth is projected to be 3.1 percent in 2026 and 3.2 percent in 2027.
  - This pace is slower than about 3.4 percent in 2024–25 and slower than the historical (2000–19) average of 3.7 percent.
  - The forecast for 2026 is revised downward by 0.2 percentage point and that for 2027 is unchanged relative to the January 2026 WEO Update.
  - Global headline inflation is expected to increase to 4.4 percent in 2026 and decline to 3.7 percent in 2027, marking upward revisions for both years.
- Absent the war:
  - Forecasts based on preconflict assumptions would have shown a slight upward revision of 2026 growth by 0.1 percentage point to 3.4 percent relative to the January WEO Update.
  - Hence, the downward revision for 2026 largely reflects disruptions from the conflict, partly offset by carryover from recent strong data and reduced tariff rates.

### Cross-country dispersion and distributional effects
- There is a high degree of cross-country dispersion in the reference forecast:
  - The toll on the conflict region and on more vulnerable economies—particularly commodity-importing emerging market and developing economies with preexisting fragilities—is much more pronounced than global averages indicate.
  - The downward revision to growth in emerging market and developing economies is 0.3 percentage point for 2026 relative to the January WEO Update.
  - The forecast is broadly unchanged for advanced economies.

### Adverse scenarios and downside risks
- Adverse energy-price scenarios:
  - Under an adverse scenario with larger and more persistent increases in energy prices:
    - Global growth would slow to 2.5 percent in 2026.
    - Inflation would reach 5.4 percent.
  - Under a more severe scenario with more damage to energy infrastructure in the conflict region:
    - Global growth would be cut to about 2 percent in 2026.
    - Headline inflation would be just above 6 percent by 2027.
  - The impact on emerging market and developing economies would be almost twice that on advanced economies.
- Broader downside risks:
  - Geopolitical tensions could worsen further, potentially becoming the largest energy crisis in modern times.
  - Domestic political strains could erupt and interact with shifts in trade and other international policies.
  - Trade-related disputes could flare up independently of geopolitical developments.
  - A reevaluation of profit expectations regarding artificial intelligence (AI) or lowered expectations of viable markups— even if productivity gains are realized—could lead to a decline in investment and trigger an abrupt correction in financial markets.
  - Larger fiscal deficits and increasing public debt could put pressure on long-term interest rates and broader financial conditions.
  - An erosion of institutions, including central bank independence and monetary policy credibility, could raise inflation expectations.

### Potential upside channels
- AI-related investment could lift activity and potentially transform into sustainable growth if faster AI adoption translates into strong productivity gains and increased business dynamism.
- Activity could also be supported by renewed momentum for structural reforms and by a sustained easing in trade tensions.

### Fiscal and macroeconomic trade-offs from defense spending and conflict
- Scaling up defense spending in response to geopolitical tensions:
  - Could boost economic activity in the short term.
  - Could bring about inflationary pressures, weaken fiscal and external sustainability, and risk crowding out social spending, potentially igniting discontent and social unrest.
- Where conflict erupts:
  - Acute macroeconomic trade-offs and scarring follow and last well beyond the immediate wartime shock.

### Policy priorities and recommendations
- Overarching approach:
  - Policies should be robust to alternative states of the world and combine country-specific actions with pragmatic multilateral cooperation to enhance resilience, foster agility, and boost adaptability.
- Preserve price and financial stability:
  - Central banks should remain vigilant and be prepared to act clearly and decisively in line with their mandates.
  - Guard against prolonged supply shocks destabilizing inflation expectations.
  - Monetary policymakers should reserve the option to look through negative supply shocks—such as the current one—as long as inflation expectations remain well anchored and the monetary policy stance is already properly calibrated.
  - Transparent communication and strong central bank independence are critical for credibility.
- Where excessive or disorderly exchange rate movements are imminent:
  - Temporary foreign exchange intervention and capital flow management measures may be warranted, provided they support appropriate monetary and fiscal policy stances.
- Financial sector preparedness:
  - Financial supervisors should ensure robust prudential oversight, conduct scenario analysis, and maintain adequate capital, liquidity, and reserve buffers.
- Fiscal policy guidance:
  - Where fiscal support is necessary to protect the most vulnerable against extreme external shocks, it should be targeted, timely, temporary, and funded within current budget envelopes by reprioritizing spending; if that is not possible, the path to restoring fiscal balances should be clearly communicated.
  - To replenish buffers for future shocks, governments should—as appropriate for their country-specific circumstances—mobilize revenues, reprioritize expenditures, make spending more efficient, and manage windfalls prudently.
- Address domestic imbalances:
  - Actions aimed at removing domestic distortions—through fiscal, structural, and industrial policies—can simultaneously narrow external imbalances while enhancing global output.
- Trade policy stance:
  - Trade restrictions play a limited role in correcting imbalances and can worsen output.
  - Countries should cooperate and take coordinated actions to restore stability in international economic relations and seek opportunities to enhance trade integration, supported by predictable, transparent, and well-communicated trade policy frameworks.

*International Monetary Fund | April 2026*

---


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