The IMF’s Revision to Global Growth – for the World and for the US
On the April 2026 World Economic Outlook, Just Released
In the latest World Economic Outlook, released yesterday (April 14, 2026), the International Monetary Fund revised downwards its forecast for global growth from 3.3 percent to 3.1 percent. That’s a large revision considering that the most recent forecast was in January 2026. (All you need to know is in Chapter 1 of the WEO.)
The IMF’s headline series (in the first part of Table 1.1 on p.9 of this April 2026 report) compares year-over-year output, i.e., growth for “2026” is calculated by comparing world GDP for all of 2026 with world GDP for all of 2025. In a sense, this is a slightly lagging indicator – it includes the IMF’s view of what will happen through the end of 2026, but in calculating the numbers, there is a relatively high weight on what happened already later in 2025 and in the first four months of 2026.
For a sense of the IMF’s view of the dynamics of what will happen within 2026 and within 2027 – and what is still to come – look at the second part of Table 1.1 on p.10 of the report, which shows their “Q4 over Q4” series. Compared with the previous (January 2026) forecast, world output in the fourth quarter of 2026 will be 2.9 percent higher than in the fourth quarter of 2025, implying a slowdown of 0.3 percent. Note, however, that in this baseline forecast, there is a robust global recovery in 2027, in large part because the IMF assumes the price of oil will fall back significantly (that forecast is 5 lines from the bottom of the table).
In the Q4 over Q4 view, which I recommend as the focus of attention, the US shows an acceleration of growth during 2026, relative to the previous forecast. In other words, the IMF does not think that the oil price shock is large enough to slow the US economy during 2026, relative to previous expectations and everything else that is going on. In all the other named industrial economies in this report, the Q4 over Q4 revision is more negative. And the slowdown in China is also more dramatic (compare minus 0.1 in the year-on-year series with minus 0.6 in the Q4-on-Q4 series).
Also keep in mind that the IMF calculates world GDP using “purchasing power parity” weights, which gives more importance (in a statistical sense) to middle income and lower income countries when you add everything up. Table 1.2 shows what happens if you prefer to use market exchange rate weights, which put more importance on richer countries. The answer is… in this case, it doesn’t matter for the headline: still a slowing of world output growth by 0.2 percent. This reflects the point that both “advanced economies” on average (that’s the US, Canada, Europe, and Japan primarily) and emerging markets on average are adversely affected by this oil and natural gas (and fertilizer etc) price shock. However you measure it, the biggest economies in the world are mostly oil and other fossil fuel importers.
The outlier is really the United States. While there are significant distributional effects within the US, including through the price increases for gasoline and diesel (respectively up $1 and $2 per gallon, according to the Energy Information Agency), at the level of overall GDP, the US is not slowing down much (if at all) from the oil price shock, according to the IMF. The big reason for this is quite simple. Since 2019, the US has been an “annual net energy exporter” (see this Energy Information Agency explainer).
Gary and I discussed the likely global effects of the US-Iran conflict in our podcast episode that aired on March 16, 2026. We didn’t commit to specific numbers at that time, but our overall assessment was very much in line with what the IMF is saying now — including the likely impact on farmers (diesel and fertilizer costs), on consumers (transportation, as well as gas for cooking and heating), and consequently on food insecurity and nutrition around the world.
(This post was drafted and edited by Simon Johnson)