IMF warns global economy ‘could soon test the limits of resilience’
World Economic Outlook says states’ oil stocks are low and budgets are overstretched, as it upgrades UK GDP growth forecast for 2026 Developing nations face triple shock, UN warns The global economy “could soon test the limits of resilience”, as emergency oil stocks run low and government budgets become overstretched, the International Monetary Fund has warned. In its twice-yearly World Economic…
The International Monetary Fund (IMF) has issued a warning that the global economy may soon reach its limits of resilience due to depleted emergency oil stocks, stretched government budgets, and high debt levels. In its World Economic Outlook, the IMF highlighted that the rerouting of oil supplies away from the Strait of Hormuz and the release of strategic energy stocks have helped contain the impact on oil prices following the US-Iran conflict.
However, it emphasized that without replenishing policy buffers and increasing supply capacity, the global economy could face challenges in the near future.
The report noted that emergency oil stock releases have been ongoing since March, with the US strategic petroleum reserve falling to its lowest point since 1982. Despite this, the IMF remains concerned about the vulnerability of the system, as additional geopolitical shocks could still rapidly affect prices and supply disruptions. IMF Managing Director Kristalina Georgieva urged governments to take swift and effective policy action to address the pressing issues.
The IMF revised its forecast for global economic growth this year to 3.1%, slightly higher than the previous 3%, while the forecast for next year remains unchanged at 3.4%. US growth is expected to stay steady at 2.3% for both this year and 2027. The UK's GDP growth forecast has been upgraded to 1.3% for 2026, up 0.3 percentage points from the previous update in July, but the IMF warned that prolonged high oil prices and rising interest rates could lead to a slowdown in growth by 2027.
The report also highlighted the risks of a prolonged stalemate or escalation in the Middle East, as well as potential disruptions to energy infrastructure, cyber-attacks, or extreme weather events that could exacerbate the situation. Despite the current spike in inflation, the IMF suggested that central banks should not overreact to short-term increases but should remain prepared to respond swiftly if inflation becomes entrenched.
Written by urgent.news from Guardian Technology's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
This story
This is one outlet's version. Read the fullest account.
