The International Monetary Fund (IMF) has projected global economic growth of 3.0% in 2026, with the pace expected to improve to 3.4% in 2027, according to its World Economic Outlook: July 2026 Update released on Wednesday.

The IMF said the overall outlook remains largely unchanged from its April forecast. It identified the ongoing conflict in the Middle East as the main drag on global growth, while rapid advances in artificial intelligence (AI) and increased technology investment are helping offset some of the economic damage.

The report noted that the impact of the conflict varies across countries. Energy-exporting nations outside the conflict zone and technology-driven economies are expected to perform better, while energy-importing countries with limited participation in global technology value chains, particularly low-income economies, face greater economic pressure.

The IMF expects global inflation to rise from 4.1% in 2025 to 4.7% in 2026 before easing to 3.9% in 2027. It also warned that an escalation of the Middle East conflict could disrupt supply chains, push up energy prices, and tighten global financial conditions.

Country forecasts show U.S. economic growth rising to 2.3% in 2026 from 2.1% in 2025, while China’s growth is projected at 4.6% and India’s at 6.4%.