IMF: Inflation Rises as Global Economy Slows

The International Monetary Fund (IMF) estimates that the global economy will grow by 3.0 percent and 3.4 percent in 2026 and 2027, respectively. These figures remain well below the 3.5 percent growth rate projected for the 2024-2025 period, indicating a significant economic slowdown worldwide. Meanwhile, global inflation is expected to rise from 4.1 percent in 2025 to 4.7 percent in 2026. Inflation is anticipated to decline only to 3.9 percent by 2027. These expectations fuel concerns that the global economy may face new waves before fully recovering.

The IMF report states that the possibility of a new conflict emerging in the Middle East is evaluated as a major risk factor. Should a regional war prolong, adverse scenarios may arise, such as continued volatility in raw material prices, further damage to global supply chains, and rising consumer prices. This situation paints a picture that will further strain already fragile global financial conditions. In this context, the institution operates on the assumption that the Hormuz Boğazı will reopen in mid-temmuz and that regional conditions will return to pre-war norms by mart 2027. Although developed countries might manage potential shortages to some extent by reducing their stocks, developing economies without sufficient reserves could face severe competition.

A significant slowdown is also expected in the growth of global trade volume. The trade growth rate is projected to drop from 5 percent in 2025 to 3.5 percent in 2026, followed by a limited recovery to 4.3 percent in 2027. The primary reasons for this contraction include a potential correction in technology-driven expectations, an accelerating fragmentation of trade, and the narrowing feasibility space for economic policies. Alongside these risks, a rapid normalization in energy markets and stronger-than-expected technology investments could create an upside surprise. The re-establishment of long-term partnerships and structural reforms boosting growth in the medium term are also considered potential positive scenarios.

The growth dynamics of advanced economies also exhibit regional disparities. This group of countries is estimated to grow by 1.7 percent in 2026 and 1.8 percent in 2027. Particularly, the European region continues to be crushed under the pressure of weak consumer confidence and high energy costs. This causes the 2026 growth forecast for the euro area to remain at 0.9 percent. Ireland-based negative data, along with slowing economic dynamics in other countries, also contributed to this decline. Although the region is expected to experience a recovery of 1.2 percent in 2027, achieving this target under current conditions appears highly challenging.

Growth in developing and emerging economies is projected to drop to 3.8 percent in 2026, but planned to rise again to 4.5 percent in 2027. The performance of these countries will vary greatly depending on their reliance on raw materials, tourism revenues, and positions within the global technology chain. The Chinese economy is expected to slow down in 2026, growing by 4.6 percent due to rising oil prices and structural barriers. In contrast, Hindistan continues to stand out with a 6.4 percent growth rate, driven by robust domestic consumption and a vibrant services sector. In Latin Amerika ve Karayipler, growth is expected to follow a steady course, remaining at 2.4 percent in 2026 and reaching 2.7 percent with a slight jump in 2027.