The International Monetary Fund (IMF) says that the war in the Middle East has significantly altered the global growth trajectory. Even though conflict-related disruptions were felt most directly in that region, the supply shock to energy and other commodities, along with impacts on broader supply chains, caused significant hardship far beyond.
According to the IMF's annual report released on Wednesday, this new shock came at a time when global public debt was already near record highs. Despite challenges from geopolitical shocks, ongoing conflicts, and major shifts in the global trading system, 2025 was characterized by economic resilience.
Thanks to private sector agility, fiscal and monetary policy support, and technology-related investment, global growth held up and inflation continued to decline. These factors drove a slight upgrade in IMF global growth forecasts at the start of 2026.
Over the medium term, prospects for growth remain weighed down by structural challenges, such as aging populations in much of the world, even without assuming additional shocks. However, current supportive fiscal policies and private investment may help carry the economy through these difficulties, while potential productivity gains from artificial intelligence (AI) hold the prospect of setting the world on a higher growth path. The IMF is helping its member countries navigate these crosscurrents - to take advantage of opportunities and manage risks - through tailored policy advice, capacity development, and financing.