On July 8th, local time, the International Monetary Fund (IMF) released an updated report in its World Economic Outlook, raising China's economic growth forecast for 2026 to 4.6%, which is a 0.2 percentage point increase from the forecast in April this year.
The report indicates that China’s economy performed better than expected in the first quarter of 2026, primarily due to investments in public infrastructure, growth in high-tech manufacturing industries, and increased exports. However, rising global oil prices, ongoing uncertainties, and structural factors are expected to continue to exert some drag on China’s economic activities.
The IMF warns that Middle Eastern wars, global trade turmoil, and changes in market expectations regarding the prospects of artificial intelligence (AI) remain major risks facing the global economy.
The institution has once again lowered its forecast for global economic growth in 2026 by 0.1 percentage points to 3.0%. It has increased the expected global economic growth rate in 2027 by 0.2 percentage points to 3.4%, but it remains below the average growth rate of 3.5% in 2024 and 2025.
Additionally, the IMF has raised its global overall inflation forecast for 2026 by 0.3 percentage points to 4.7%, and expects it to fall back to 3.9% in 2027.
The report indicates that since the United States and Israel initiated the war against Iran on February 28, global energy prices have increased by 25% compared to pre-war levels, and will remain high for some time to come. The latest projections assume that the Hormuz Strait will resume navigation by mid-July, and return to pre-war conditions by March 2027.
The IMF stated in its report that, so far, the global economy has been more resilient to the impact of war than previously feared. The prospects for energy-exporting countries and economies deeply integrated into the technology industry have improved. However, for countries that rely on commodity imports and struggle to benefit from AI development, their expected economic growth has been significantly reduced.
The report also predicts that global trade growth will slow significantly from 5.0% in 2025 to 3.5% in 2026. The IMF notes that trade growth was relatively fast in 2025, partly due to companies rushing to place transactions before U.S. tariff measures took effect. However, by 2027, global trade growth is expected to rebound to 4.3%.
