The International Monetary Fund revised its estimate for 2026 global growth lower in its World Economic Outlook update released on Wednesday, with downward adjustments for several regions.
World output is now expected to expand by 3.0% in 2026 after a 3.5% gain in 2025, a small downward adjustment from a 3.1% gain for 2026 in the April version of the WEO. Growth is expected to accelerate to 3.4% in 2027, an upward adjustment from the April estimate of a 3.2% gain.
"The modest slowdown reflects the effects of the war in the Middle East being partly offset by accelerated demand-driven momentum in the global technology cycle thanks to advances in artificial intelligence and its adoption," the IMF said. "The impact varies widely based on countries' exposure to the war and position in the technology value chain."
The IMF was moderately less pessimistic about the war impact than they were in the April WEO but still urged caution.
"Risks to the outlook are more balanced than in April but still tilted to the downside," the IMF said. "The possibility of renewed Middle East conflict looms large and could extend commodity price volatility, further threaten supply chains, raise prices, and weigh on financial conditions. Trade fragmentation could accelerate, possibly hurting output and increasing prices."
The IMF said that its projections assume that the Strait of Hormuz will begin to reopen in mid-July, with a return to a prewar state by March 2027.
For the US, the IMF now sees a 2.3% gain in 2026 after a 2.1% increase in 2025, unrevised from the April estimate. A slowdown to 2.2% growth is expected for 2027, an upward adjustment from the 2.1% gain previously estimated.
The Canadian economy is expected to expand by 1.1% in 2026 after a 1.9% gain in 2025, a large downward adjustment from a 1.5% gain previously estimated for 2026. Growth is seen accelerating to 1.7% in 2027, revised down from 1.9% in the April WEO.
Euro area growth is now seen at 0.9% in 2026 after a 1.4% gain in 2025. The new estimate represents a downward revision from a 1.1% gain forecasted in April. Growth is expected to accelerate to 1.2% in 2027, unrevised from the April estimate.
UK economic activity is now expected to rise by 1% in 2026, revised up from 0.8% in the previous estimate and following a 1.4% increase in 2025. The UK economy is expected to grow by 1.3% in 2027, unrevised from the previous estimate.
The Japanese economy is expected to rise by 0.6% in 2026, revised down from 0.7% in the April estimate and following a 1.1% increase in 2025. The IMF sees Japanese growth accelerating modestly to 0.7% in 2027, revised up from 0.6% in the previous estimate.