Prelims: Current events of national and international importance | Reports & Indices
Why in News?
The World Economic Outlook, 2026 was released recently.
Released by – International Monetary Fund (IMF), twice a year.
Purpose – It presents analyses and projections of the world economy in the near and medium term, covering advanced, emerging, and developing economies.
Key Findings
India’s Status – India will remain among the world’s fastest-growing major economies, with its GDP projected to expand by 6.4% in FY2026-27, supported by strong private consumption and robust services sector activity.
Global Economic Growth – Projected to slow to 3.0% in 2026 before recovering to 3.4% in 2027.
Reason for Slowdown – Ongoing risks linked to the war in the Middle East, trade fragmentation and potential corrections in market expectations for AI.
Headline Inflation – Projected to rise from 4.1% (2025) to 4.7% in 2026 and is expected to drop to 3.9% in 2027, mainly due to higher energy and food prices.
Core Inflation – Expected to moderate only gradually.
Energy Prices – Now 25% higher than before the war began on February 28 and are expected to stay elevated.
Trade Volume Growth – Expected to decelerate sharply from 5% in 2025 to 3.5% in 2026, before improving to 4.3% in 2027.
Emerging Markets & Developing Economies – Growth is projected to ease to 3.8% in 2026 before recovering to 4.5% in 2027.
Asian Economies – China’s growth is projected to slow to 4.6% in 2026 due to higher oil prices and structural headwinds. Vietnam is revised upward to 7.5%, while Malaysia is expected to expand 4.7% on the global tech cycle.
The UK is expected to grow 1.0% in 2026, Japan 0.6%, and South Korea 2.6% on strong semiconductor demand.
United States – Growth is projected at 2.3% in 2026 and 2.2% in 2027, broadly unchanged from the IMF’s April forecast.
Euro Area – Projected at 0.9% in 2026, reflecting weaker carryover from the first quarter, higher energy prices and subdued consumer confidence.
Middle East & Central Asia – Growth is projected to slow sharply to 0.7% in 2026 before rebounding to 6.5% in 2027, following a prolonged closure of the Strait of Hormuz.
Major Commodity-Producing Economies – Iraq, Kuwait and Qatar are expected to witness sharp economic contractions in 2026, while Saudi Arabia is projected to grow by 1.7%.
