LIVE: IMF releases World Economic Outlook

Growth slashed to 0.8% for 2026

The UK forecast was revised down by 0.5 percentage points due to weak 2024 carryover effects and the Middle East war's energy price shock, with a rebound to 1.3% expected in 2027.

Gas dependence amplifies price shocks

Unlike other European nations, the UK's low gas reserves and high import exposure mean wholesale energy prices pass through more directly to the economy despite temporary household protections.

1970s wage-price spiral fears dismissed

Despite inflation rising to 3.2%, the IMF sees little evidence of strong wage pressures due to significant economic slack and a negative output gap keeping core inflation near 2.7%.

Stability Pact must not be suspended

The IMF urged EU members to stay the course on deficit reduction plans through 2029-2031 rather than pausing fiscal rules to finance broad energy subsidies.

Targeted support beats blanket subsidies

Lessons from 2022's costly 2-3% of GDP energy measures show subsidies become politically permanent; new aid should be temporary and narrowly targeted to vulnerable households.

Strait of Hormuz costs fall on consumers

In the event of shipping tolls or disruptions through the critical chokepoint, the IMF expects consumers—not producers—to bear the cost due to inelastic energy supply.

Sub-Saharan Africa faces aid and fertilizer squeeze

Regional growth was cut 0.4 percentage points cumulatively as bilateral aid drops 16-28% and rising fertilizer prices threaten food security, pushing median inflation to 5%.

Nigeria downgraded on non-oil weakness

Growth was revised down to 4.1% for 2026 as higher fuel and fertilizer costs weigh on non-oil activity, offsetting gains from oil exports.

Middle East split by conflict and exports

Egypt was cut to 4.2% growth on oil import costs and investment uncertainty, while Saudi Arabia fell 1.4 points to 3.1% due to war-related production disruptions.

Latin America contrasts: Brazil up, Argentina down

Brazil was upgraded to 1.9% growth benefiting from oil exports and 80% renewable energy, while Argentina was cut to 3.5% due to weak momentum despite being an oil exporter.

Adverse scenario means $75 oil until 2027

The IMF's downside case assumes more acute energy disruptions keeping prices elevated until 2027, when they normalize to $75 per barrel.

Conflict countries face negative growth

While oil exporters benefit from higher prices, nations directly in the conflict path face severe downgrades and contracting economies.