The International Monetary Fund (IMF) released its April 2026 World Economic Outlook. As expected, the IMF lowered its forecast for global economic growth this year in response to the conflict in the Middle East. The economic organization also raised its forecast for global inflation this year. The IMF was a bit more upbeat about the global economy in its previous outlook; however, the conflict in the Middle East has raised uncertainty, lowered consumer and business confidence, and pushed up consumer prices, particularly energy costs.

• The IMF expects the global economy will expand by 3.1% in 2026, assuming the length of the conflict in the Middle East is relatively short. This was down from the IMF’s earlier forecast of 3.3%. The report showed the IMF forecasts growth of 3.2% in 2027.
• The economic body says the conflict in the Middle East will weigh on commodity markets and has shifted inflation expectations and financial conditions.
• According to the IMF, this could offset some of the tailwinds from earlier this year, such accommodative monetary policy and robust investment in technology.
• The forecast for inflation this year was also revised higher to 4.4%. The IMF expects inflation to slow to 3.7% in 2027. The conflict in the Mideast has pushed up energy costs sharply.
• The IMF projects Canada’s economy to grow by 1.5% in 2026, which would be down from the 1.7% rate of growth in 2025. The U.S. economy is expected to grow by 2.3% this year.

The IMF’s outlook has been clouded by the conflict in the Middle East. The IMF believes the conflict will have a significant impact on the global economy, particularly if it lingers for some time. Canada’s economy could face many of the same challenges, such as higher inflation, lower confidence levels and the possibility of higher interest rates. Yesterday, markets were hopeful the US and Iran were preparing to reengage in peace talks.

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