Global Growth Slows as Energy Costs Hit Importers

The IMF expects global output to grow by 3.1% in 2026, but warns that higher energy prices could strain countries reliant on imports and shrink Saudi Arabia’s economy by 3.3%. The Hindu puts the global forecast at 3.06%, down from 3.5% last year; Mint says it is 0.4 percentage points below last year and unchanged from the IMF’s April forecast.

Growth and the cost of energy

The IMF said next year’s global output would likely grow slightly faster than it had forecast six months earlier. Its outlook ranks the risk of another rise in global energy prices and a sudden end to the AI investment boom above the effects of U.S. tariffs.

The Hindu reported that the Russia-Ukraine war and the U.S.-Iran war in West Asia would strain countries dependent on imports. Neither war had a permanent ceasefire in sight. Iran-backed Houthis were stepping up attacks in Saudi Arabia, while Russia and Ukraine were intensifying attacks on energy infrastructure.

The Middle East and Central Asia region was projected to contract by 0.33%. Emerging and developing Asia was forecast to grow 5.12%, down from 5.6% last year, while China’s growth was projected at 4.47%, compared with 5% last year. India’s GDP growth was forecast at 7.01%, down from 7.82% the previous year.

Mint said AI-related investment had supported growth in advanced economies, while rising energy prices challenged poorer countries. The IMF’s chart groups economies by exposure to AI and higher energy prices, showing potential winners and losers. India was placed among economies that could gain by integrating trade with the AI technology cycle, while remaining exposed to a further deterioration in net energy exports.

Investment, tariffs and limited buffers

The IMF prepared its latest outlook before a selloff in global technology stocks, amid rising borrowing costs, hotter-than-expected U.S. inflation data and growing skepticism about returns on large infrastructure capital expenditures. The report names a sudden end to the AI investment boom as a growth risk.

Mint columnist Niranjan Rajadhyaksha said IMF managing director Kristalina Georgieva used the words “Winter is coming” in a recent speech. Forecasts generally show the central point in a range of possible outcomes, he wrote, while speeches describe tail risks; institutions concerned with credibility sometimes warn rather than habitually cheer.

Rajadhyaksha said the West Asia war and the subsequent rise in energy prices had not, at least yet, done much damage to the global growth outlook. The global economy, he noted, had weathered the pandemic, the Russia-Ukraine war, U.S. tariffs and the expanding war in West Asia since 2019, while its current expansion rate remained not too different from the seven years before the pandemic.

He also said resilience came at a cost, with buffers under pressure. Most countries had less room to support activity through fiscal policy because public debt was rising. Rising inflation had disrupted the ability to provide monetary stimulus through lower interest rates or an expansion of central-bank money. Countries had also used strategic petroleum reserves to cushion oil supply disruptions through the Strait of Hormuz.

The IMF put tariff effects below energy prices and the AI investment risk, unlike in its October 2025 outlook, when tariff increases led the risks. Rajadhyaksha said U.S. court rulings and executive actions left the effective statutory tariff rate about 5.3 percentage points below the level previously assumed. A New York Federal Reserve study published on October 8 estimated tariffs had added 2.9 percentage points to U.S. inflation in a basket of goods by February 2026; without them, prices in that basket would have fallen by almost 1%. The increases hit goods made in the United States as well as imported goods.

Corporate competition and state action

The Hindu’s October 20 roundup also reported a dispute over Indian licensing for satellite communications involving Starlink’s Elon Musk and Reliance Jio’s Mukesh Ambani. Musk alleged that certain companies were blocking Starlink from obtaining government approvals and accused “oligarchs” of interference. Reliance said it had “never feared competition.” That statement came on October 17, after Musk asked on X whether Ambani was “the real boss of India.” Starlink began efforts to start operations in India in 2021.

The Enforcement Directorate summoned former Keralam Chief Minister Pinarayi Vijayan to its zonal office in Kochi on October 23 for questioning in a money-laundering case linked to the CMRL-Exalogic pay-off case. The agency announced the summons October 16. The Keralam High Court had dismissed Vijayan’s plea challenging a First Information Report filed against him, his daughter and his son-in-law. The case concerns alleged illegal transactions and bribes between Cochin Minerals and Rutile Limited and people related to Vijayan; the Income Tax Department and the Serious Fraud Investigation Office flagged transactions.

Delhi Police removed Jantar Mantar’s status as a protest and demonstration venue on October 12, naming Ramlila Ground, Burari Ground and CBD Ground as alternatives. They are around 4 km, 15 km and 13 km from Jantar Mantar, respectively. Activists said the change would make it harder for citizens to bring demands to political leaders and decision-makers. Delhi Police Commissioner Anurag Kumar issued the order following recommendations from a committee constituted by the Union Ministry of Home Affairs. Protesters valued Jantar Mantar’s proximity to Parliament, government offices and the media.

Wholesale price inflation hit 11.4% in September 2026, driven mainly by food and fuel. Rahul Agrawal, Principal Economist at ICRA, said non-food manufactured goods accounted for more than half of the 147-basis-point rise in headline inflation from August, reflecting the pass-through of input cost pressures. Manufactured-goods inflation reached a series high of 9.8%, up from 8.4% in August.