The International Monetary Fund (IMF) has revised down its global economic growth forecast, projecting expansion of 3.1% in 2026, as rising energy prices and uncertainty linked to the Middle East conflict weigh on global activity. 

In its latest World Economic Outlook (WEO) released in April 2026, the IMF expects global growth to slow from 3.4% in 2025 to 3.1% in 2026, with inflation projected to rise to 4.4% due to higher fuel and commodity prices. “With the assumption that the conflict remains limited in duration and scope, global growth is projected to slow to 3.1% in 2026 and 3.2% in 2027,” the IMF stated, as quoted by Bloomberg Technoz. 

The IMF said the momentum seen in the global economy in previous years, supported by resilient private sector activity and favorable financial conditions, has been disrupted by the conflict. “The war has halted the momentum,” IMF Economic Counsellor Pierre-Olivier Gourinchas said, as quoted by Jakarta Globe. 

The Fund also highlighted risks to global energy supply chains, particularly disruptions to oil and gas flows through key shipping routes, as a major factor contributing to the downgrade. 

Indonesia Growth Revised Downward 

Indonesia’s economic growth is projected at 5% in 2026, slightly lower than the IMF’s January 2026 estimate of 5.1%. Growth is expected to recover to 5.1% in 2027 and stabilize at 5.2% in the following years. 

Despite the downward revision, Indonesia’s growth outlook remains relatively stronger compared to several regional peers. The IMF projects China’s economy to expand by 4.4% in 2026 and the Philippines by 4.1%, while India is expected to grow at 6.5%, as reported by CNBC Indonesia. 

Other international institutions have also adjusted their forecasts. The World Bank estimates Indonesia’s economy will grow by 4.7% in 2026, down from its earlier projection of 4.8%, citing external pressures such as rising global oil prices and increased risk-off sentiment in financial markets, as reported by Bloomberg Technoz. Meanwhile, the Asian Development Bank (ADB) forecasts Indonesia’s growth at 5.2% in both 2026 and 2027, supported by strong domestic demand and infrastructure spending. 

Asia Faces Cost Pressures and Fiscal Constraints 

Across Asia, the IMF expects the impact of rising energy prices and global uncertainty to be increasingly visible. China’s growth is projected at 4.4% in 2026, with strong exports offset by weak domestic consumption. 

Emerging economies in the region are also facing tighter fiscal space as public debt levels rise. “With a rising public debt trajectory, fiscal space is much thinner than before. Price caps, subsidies, and similar interventions are popular, but they distort prices. They're often poorly designed, hard to unwind, and extremely costly. Most countries don't have that luxury anymore,” Gourinchas said, as quoted by Jakarta Globe. 

The IMF noted that while many emerging economies have become more resilient in recent years, higher energy and food prices are now testing that resilience. Governments are being advised to focus on targeted and temporary support rather than broad-based subsidies. 

Energy-importing economies, including many in Asia, are expected to face the greatest pressure as higher import costs reduce purchasing power and weigh on growth. The IMF also warned that emerging markets could face additional risks from tighter global financial conditions and potential capital outflows. 

The IMF further outlined downside scenarios in which prolonged conflict or greater disruptions to energy infrastructure could push global growth down to 2.5% in 2026, with inflation rising to 5.4%. In a more severe scenario, growth could fall to around 2%, with inflation exceeding 6% in 2027, as reported by CNBC Indonesia.