The International Monetary Fund (IMF) released its World Economic Outlook yesterday, revealing that a slowdown in the global economy is projected for this year, with a moderate increase in inflation expected. These projections are the consequences of the continuing war in the Middle East, which has constrained oil supplies and driven oil, gas and commodity prices higher. The IMF added that downside risks dominate its global projections for growth.
“A longer or broader conflict, worsening geopolitical fragmentation, a reassessment of expectations surrounding artificial intelligence‑driven productivity, or renewed trade tensions could significantly weaken growth and destabilize financial markets,” the IMF report said.
“Elevated public debt and eroding institutional credibility further heighten vulnerabilities.”
For the global economy, the IMF projects growth of 3.1 percent in 2026, down by 0.2 percentage points when compared to a previous forecast of the global economy. The IMF said the outlook for 2027 remains unchanged.
The IMF also projects growth of 2.3 percent for the Latin American and Caribbean region, down 0.1 percentage points from the previous year.
The IMF does project growth in the region to rebound in 2027, with growth of 2.7 percent expected.
Group Chief Executive Officer for Fidelity Bank and Trust International Limited Gowon Bowe told Guardian Business recently that the IMF projections are not “overly surprising”, and The Bahamas has to remain attuned to what these outlooks are saying in order to build country strategies that prepare for the negative effects of the war, to take advantage of any opportunities that might present themselves in the midst of the crisis.
“When we’re talking about tourism, we need the growing economies to be in our line of sight,” said Bowe.
The IMF said while global inflation is expected to increase in 2026, it should resume its decline in 2027.
Bowe said in the midst of crises, the country has to focus on real growth and continued buffers that protect against future natural disasters or man-made events.
