Astana: The global economy is showing unexpected resilience despite the ongoing conflict in the Middle East, with growth projections holding steady as a surge in technology investments, particularly in AI, helps mitigate the impact of the energy shock. This is according to the International Monetary Fund's (IMF) latest World Economic Outlook (WEO) update released on July 7, as reported by The Astana Times.
According to Azeri-Press News Agency, the IMF forecasts global growth at 3% in 2026 and 3.4% in 2027, which remains largely unchanged from its April predictions. However, the institution cautions that growth prospects are uneven across different regions and that inflationary pressures remain an ongoing concern. Petya Koeva Brooks, IMF Deputy Director of the Research Department, highlighted two opposing forces shaping the global outlook: the enduring effects of the Middle Eastern energy shock and a technology-driven investment boom. The impact of these forces varies significantly across countries, largely dependent on their exposure to the conflict and position within the technology value chain.
While growth forecasts are stable, the IMF has revised its global headline inflation forecast upward to 4.7% for 2026, with core inflation expectations remaining largely unchanged. Brooks noted that the disinflation trend observed since early 2024 has stalled.
The IMF reported that the world economy has managed the conflict better than initially feared. A major oil price surge was averted through strategies such as inventory drawdowns, increased production outside the Gulf, and measures to soften energy demand. Additionally, the increasing share of renewable energy and declining energy intensity in various economies have bolstered resilience. Financial conditions, after a sharp tightening following the conflict's outbreak, have since eased and are supportive compared to historical standards.
The Middle East and Central Asia region is anticipated to undergo significant growth fluctuations. Regional growth is expected to decelerate to 0.7% in 2026 before rebounding to 6.5% in 2027, reflecting the economic impact of conflict-related disruptions and shipping constraints through the Strait of Hormuz. The IMF's baseline scenario expects the strait to begin reopening in mid-July, with conditions normalizing by March 2027. Major oil exporters like Iraq, Kuwait, and Qatar are projected to experience economic contractions this year due to disruptions in energy production and transport, followed by substantial growth rebounds in 2027.
Saudi Arabia is projected to perform better due to diversified export routes, with growth forecasts of 1.7% in 2026 and 5.5% in 2027. Iran's economy is expected to contract by 5.4% in 2026, a modest improvement from previous projections due to stronger-than-expected oil export performance earlier in the year.
In contrast, countries in the Caucasus and Central Asia are expected to maintain positive growth momentum despite rising energy and food prices. The IMF notes that these economies benefit from favorable growth conditions, even amid global uncertainty. For energy-exporting countries in Central Asia, relatively high commodity prices continue to support economic activity. Moreover, expanding trade corridors, infrastructure investment, and growing integration into regional supply chains are sustaining growth. This regional outlook contrasts with many low-income energy-importing economies worldwide, which face weaker growth due to higher import costs and limited involvement in the AI-driven technology cycle.