The International Monetary Fund said the global economy is still expected to expand by about 3 percent in 2026, even after the energy shock caused by the war in the Middle East. That’s the headline number. The rest is the usual machinery of managed damage: higher oil and gas prices, mounting debt, and governments told to keep the books tidy while ordinary people absorb the bill.
Julie Kozack, spokesperson for the International Monetary Fund, said oil and gas prices remained elevated and that the energy shock from the war was not over. She said the global economy had weathered the shock better than feared. Better for whom, exactly, the IMF doesn’t say. The institution’s language stays polished while the costs keep moving downward, into food prices, heating bills, fertilizer costs, and the daily arithmetic of survival.
The State System Keeps the Shock Moving
Kozack said global debt pressures were mounting and that the disinflation process over the 2022 cost-of-living crisis had stalled. She said global inflationary expectations have risen but remain well-anchored over the longer run. That’s the technocratic version of saying the crisis hasn’t gone away; it’s just been managed into a new phase. "So far, despite six months of war in the Middle East, the global economy has been resilient," Kozack said, adding that the use of oil and gas reserves had allowed some countries to cope with energy shocks caused by the war, while others had shifted to new energy sources or acted to curb demand.
"We remain on track for world growth of around 3 percent but uncertainty, as we’ve been saying for quite some time, continues to remain high," she said. The sentence does a lot of work. It acknowledges the war, the shock, and the uncertainty, then calmly returns to the growth target as if the target itself were the point. The people living through the shock don’t get a target. They get prices.
The IMF in July forecast 2026 global growth at a sluggish 3 percent, compared with an average of 3.5 percent seen in 2024 and 2025, and its April forecast of 3.1 percent. At the time, it said that forecast assumed the war would wind down in mid-July, but Iran and the US have both escalated their attacks and the war has widened with increased military activity in Yemen. The global lender will release an updated forecast during the annual meetings of the IMF and the World Bank in Bangkok from Oct. 12 to 18. The calendar keeps moving. So do the bombs, the sanctions, and the forecasts.
Debt, Sanctions, and the Usual Discipline
Kozack said the global economy was being pulled in opposite directions by the negative energy supply shock that was driving prices of energy, fertilizers, food and other commodities sharply higher, while the AI-led technology cycle was providing a positive demand shock. One shock raises the price of bread and fuel. The other gives the finance class something to cheer about. The IMF can hold both in the same sentence without blinking.
She said risks remain high, with many countries needing to restock their oil and gas reserves and energy demands set to rise as winter approaches in the Northern Hemisphere. Pressures are also mounting on global public debt, which is already at nearly 100 percent of gross domestic product, the highest level since World War Two, and is set to rise further. Many advanced economies have particularly high public-debt-to-GDP ratios. The institution presents this as a warning, but the warning is really for governments to keep discipline on everyone else.
Kozack said liquidity problems are also building in developing countries, including in Africa, partly due to a reduction in bilateral assistance. The IMF is urging central bankers to stick to their price stability mandates, while encouraging fiscal policymakers to develop medium-term consolidation plans. "We’re not in a situation where fiscal consolidation needs to take place overnight, but having a clear, laid-out plan and strategy for how deficits and debt are going to come down is very important for fiscal authorities," Kozack said. That’s the language of managed austerity, dressed up as prudence.
The IMF was also urging authorities to focus on lifting growth prospects through structural reforms and removing "self-inflicted" barriers to growth. Kozack said the IMF would look closely at the impact of new US sanctions against Iran, including secondary sanctions aimed at firms in third countries that support Tehran. A fuller report was expected in the upcoming global outlook. The institution will meet in Bangkok and issue another forecast, because the ritual of forecasting never really stops. The war continues, the debt rises, and the people who pay for both are expected to call it resilience.