Global growth slows as IMF warns of mounting risks

The International Monetary Fund (IMF) has warned that the world economy is losing momentum amid rising geopolitical tensions and tighter financial conditions, cutting its global growth forecast for 2026 to around 3.1%.

The downgrade reflects what the fund describes as a more uncertain and fragile global outlook, driven by weakening investment, persistent inflation pressures in some economies, and continued instability across key regions. It said businesses are becoming increasingly cautious, with many delaying expansion plans due to unpredictable trade conditions and higher borrowing costs.

The IMF pointed to uneven recovery across major economies, with some advanced nations maintaining steady growth while several developing markets face sharper slowdowns. Policymakers, it noted, are still struggling to balance inflation control with the need to support economic expansion, as interest rates remain elevated in many countries.

The fund also warned that heightened geopolitical tensions are contributing to market volatility and weakening investor confidence. While global supply chains have stabilised compared with recent years of disruption, they remain vulnerable to regional conflicts and shifting trade policies.

Economists say the revised outlook suggests the post-pandemic recovery is entering a more restrained phase, where growth continues but at a slower pace. The IMF stressed that it is not forecasting a global recession, but cautioned that the outlook remains fragile and could deteriorate quickly if new shocks emerge.

For now, it has urged governments and central banks to focus on strengthening confidence, encouraging investment, and maintaining financial stability as uncertainty continues to shape the global economic landscape.