The International Monetary Fund warned that the global economy "could soon test the limits of resilience" as emergency oil stocks run low and government budgets become stretched. In its World Economic Outlook, the IMF noted that whilst global growth has weathered the Middle East conflict better than expected over the past six months, the rerouting of oil supplies and release of strategic energy reserves have been crucial. However, these emergency stocks are now depleted, leaving little room for manoeuvre if prices spike again.
The IMF managing director, Kristalina Georgieva, called on governments to tighten spending amid rising global debt. "We cannot keep delaying necessary policy action, you have the tools, now have the wisdom to use them," she said. The US strategic petroleum reserve has fallen to its lowest level since 1982, underscoring vulnerabilities in the system.
For the UK, the IMF upgraded its growth forecast for this year to 1.3%, up 0.3 percentage points from July. However, it warned that prolonged high oil prices and rising interest rates would weigh on growth next year, cutting its 2027 forecast to 1.2% from 1.3%. The IMF revised global growth marginally to 3.1% for this year and kept next year's forecast at 3.4%.
The IMF flagged escalating risks to the world economy, particularly from potential further conflict in the Middle East, cyber-attacks and extreme weather. Global inflation is expected to remain at 4.7% this year but decline more slowly to 4.1% in 2027, with elevated oil prices prolonging the spike longer than previously anticipated.