From the HERE City National Desk
BANGKOK — The International Monetary Fund says the world economy has held up better than expected against war, an energy shock and trade fights, but it is warning finance ministers gathered in Bangkok this week that the cushions behind that resilience are wearing thin.
In its latest World Economic Outlook, released at the annual meetings of the IMF and World Bank in the Thai capital, the fund projects the global economy will expand 3.1% in 2026 before picking up to 3.4% in 2027.
The recovery is increasingly lopsided, the IMF said. Countries riding the investment boom in artificial intelligence or enjoying favorable trade terms are doing fine, but a harder road lies ahead for poorer nations and many that must import energy.
The fund said the room economies had to absorb shocks is narrowing fast, leaving risks tilted to the downside. It flagged the chance that conflict in the Middle East persists or widens, keeping food and energy costs high, along with climbing yields on government bonds and a new round of trade frictions.
Its advice to governments is to rebuild budget room without more delay given heavy debt and higher borrowing costs, while keeping any help for households hit by food and energy prices short-term and narrowly aimed. Central banks, it said, should keep decisions tied to incoming data. IMF Managing Director Kristalina Georgieva and Bank of England Governor Andrew Bailey have both pressed for tighter budgets.
Not every forecast moved lower. The fund raised its growth outlook for the United Kingdom this year and praised its plan to cut the deficit. Countries that seek IMF loans typically must front-load tax increases and spending cuts, so that 50% of the steps take effect within 12 months and roughly 67% inside 24 months.
