The global economy is proving more resilient than expected despite the fallout from the war in the Middle East, with growth projections holding broadly steady as a technology investment boom driven by AI offsets part of the energy shock, according to the International Monetary Fund’s (IMF) latest World Economic Outlook (WEO) update released on July 7, The Astana Times reports.
The IMF projects global growth at 3% in 2026 and 3.4% in 2027, broadly unchanged from its April forecast on a cumulative basis. However, the institution warned that the outlook remains uneven across regions and that inflationary pressures persist.
“The global outlook is being shaped by two powerful forces pulling in opposite directions: the lingering effects of the energy shock from the war in the Middle East, and a technology-driven investment boom,” said IMF Deputy Director of the Research Department Petya Koeva Brooks during a July 7 press briefing.
“The net effect varies significantly across countries, depending on their exposure to the war and their position in the technology value chain,” she added.
While growth forecasts remain relatively stable, the IMF revised its global headline inflation forecast upward to 4.7% in 2026. Core inflation projections were left broadly unchanged.
“Put simply, the disinflation trend that has been in place since early 2024 has stalled,” Brooks said.
The IMF noted that the world economy has weathered the conflict better than initially feared. A larger oil price spike was avoided through inventory drawdowns, increased production outside the Gulf region, and measures that helped soften energy demand.
The growing share of renewable energy and declining energy intensity across many economies have also strengthened resilience. Financial conditions, which tightened sharply following the outbreak of the conflict, have since eased and remain supportive by historical standards, according to the report. The Middle East and Central Asia region is expected to experience one of the most dramatic swings in growth.
Regional growth is projected to slow sharply to 0.7% in 2026 before rebounding to 6.5% in 2027, reflecting the economic impact of disruptions linked to the conflict and shipping constraints through the Strait of Hormuz.
The IMF’s baseline scenario assumes the strait begins to reopen in mid-July and that conditions gradually normalize by March 2027. Among the region’s major oil exporters, Iraq, Kuwait and Qatar are projected to see significant economic contractions this year as disruptions affect energy production and transport, followed by double-digit growth rebounds in 2027.
Saudi Arabia is expected to fare better due to its more diversified export routes, with growth projected at 1.7% in 2026 and 5.5% in 2027. Iran’s economy is forecast to contract by 5.4% in 2026, though this represents a modest improvement from the IMF’s April projections following stronger-than-expected oil export performance earlier this year.
In contrast, countries in the Caucasus and Central Asia are expected to maintain positive momentum despite higher energy and food prices. The IMF said economies in the region continue to benefit from favorable growth tailwinds, even as global uncertainty remains elevated. For energy-exporting countries in Central Asia, relatively high commodity prices continue to support economic activity.
At the same time, expanding trade corridors, infrastructure investment and growing integration into regional supply chains are helping sustain growth. The region’s outlook contrasts with that of many low-income energy-importing economies globally, which face weaker growth due to higher import costs and limited participation in the AI-driven technology cycle.
Follow us on Telegram
t.me/apanewsaz
Follow us on Instagram
Follow us on TikTok
Follow us on Facebook
Follow us on X
