PARAMARIBO – The global economy is once again under tension as the outbreak of war in the Middle East in late February 2026 disrupted a period of steady growth. While the past year was supported by strong technological investments and loose monetary policy, the conflict is now acting as a brake on economic activity. The commodity markets in particular are becoming disrupted, while inflation expectations are rising. Against the backdrop of this uncertainty, the International Monetary Fund (IMF) is working in its latest World Economic Outlook with a so-called reference scenario, which assumes that disruptions will gradually decrease by mid-2026.
Growth is falling, inflation is rising
In this base scenario, global economic growth will be 3.1 percent in 2026, followed by 3.2 percent in 2027. For 2026, this means a downward adjustment of 0.2 percentage points compared to previous estimates. At the same time, global inflation is expected to rise to 4.4 percent in 2026. According to experts, growth prospects for 2026 would have increased without the conflict, partly due to recent positive economic figures and decreasing trade barriers.
The economic consequences vary greatly by region and type of economy. The outlook for advanced economies remains broadly stable, while emerging markets and developing countries see a clearer downward revision of 0.3 percentage points on average. Countries that are dependent on raw material imports and already suffer from structural vulnerabilities are particularly affected by the current disruptions.
Risks remain high
According to the IMF, the risks for the coming period remain predominantly downwards. In a scenario in which energy prices remain high for a long time, global growth could fall further to 2.5 percent. In the event of a more serious escalation, which also affects energy infrastructure, growth could even weaken to around 2 percent.
In addition to the conflict, the IMF also points to other uncertainties, including possible trade conflicts surrounding rare earth metals and the risk of a correction on financial markets if profit expectations surrounding artificial intelligence are adjusted downwards.
Need for policy and cooperation
To meet these challenges, the IMF emphasizes the importance of tight policies aimed at price and financial stability, as well as ensuring healthy public finances. Central banks are called on to remain alert to supply shocks to prevent inflation expectations from spiraling out of control. Where necessary, governments should opt for targeted and temporary support measures for vulnerable groups.
In addition, the report underlines that international cooperation and further trade integration remain essential to support stability in the global economy and strengthen confidence in the international economic system.
