Washington: The International Monetary Fund (IMF) projects global growth will slow to 3.1 percent in 2026 as inflation rises, with geopolitical disruptions and shrinking financial buffers putting economic resilience under pressure.

In its October 2026 World Economic Outlook, the IMF said growth was expected to recover to 3.4 percent in 2027. Global headline inflation was projected to rise to 4.7 percent this year before easing to 4.1 percent next year.

The forecasts assume the Middle East conflict does not escalate further and energy markets gradually return to normal.

The IMF said investment in artificial intelligence, private sector adaptation and the use of financial buffers had helped sustain activity despite the war. However, the benefits were uneven, with energy importers outside technology supply chains facing the most difficult outlook.

Economies benefiting from technology investment or favourable trading conditions were pulling further apart from those facing higher import bills and weaker demand, the report said.

The IMF identified further conflict escalation, renewed trade tensions, fiscal vulnerabilities and a reassessment of expectations surrounding AI as risks that could weaken growth.

Stronger AI investment, productivity gains and a sustained easing of geopolitical tensions could improve the outlook, it said.

For households facing higher food and energy costs, the IMF recommended temporary, targeted income support that allows prices to adjust.

Its analysis found that measures suppressing prices could require three to 22 times more public funding than targeted transfers. Such measures could also become less effective when government finances were constrained or many countries adopted them simultaneously.

The report called on governments to rebuild fiscal space, maintain monetary and financial stability and strengthen international cooperation.

The projections use information available through October 1, 2026, and may not reflect subsequent data releases.