World Economy Poised for ‘Modest Slowdown’ to 3% growth

Global growth this year is likely to slow slightly more than previously projected, while the disinflation trend over the past two years has stalled, according to the World Economic Outlook Update, released on July 8th.

Growth is forecast decelerate to 3 percent, less than the 3.1 percent projection in the April WEO and slower than the 3.5 percent growth in each of the past two years.

The estimate for global inflation this year was raised to 4.7 percent, an increase of 0.3 percentage points.

The “modest slowdown” in economic growth reflects the impact of the war in the Middle East being partly offset by a technology-driven investment boom, according to the WEO Update, which was released amid renewed escalation in the conflict.

Continuing hostilities could reignite commodity price volatility, tighten financial conditions, strain policy buffers, and worsen food insecurity in low-income countries.

However, the report also projects global growth will rebound to 3.4 percent in 2027.

“The world economy has weathered the shock from the war better than feared,” said Petya Koeva Brooks, deputy director of the IMF Research Department, at a press briefing Wednesday.

“A larger spike in oil prices was avoided thanks to inventory drawdowns, expanded production outside the gulf, and actions to help soften oil demand.