What the World Economic Outlook said

The IMF's twice-yearly World Economic Outlook, published on Tuesday in Bangkok, carried the message that global growth had withstood the Middle East conflict better than feared over the past six months. But the fund paired that reassurance with a caution: without shoring up supply capacity and replenishing policy buffers, the global economy could soon test the limits of resilience.

The warning lands where the IMF and World Bank are holding their annual meetings this week.

Why the buffer is thinning

Behind that caution is the state of the cushion itself: emergency stocks are now depleted, and the fund said high debt levels and deficits in many countries could leave governments with little capacity to shield consumers from future price jumps.

• •Rerouting oil supplies away from the Strait of Hormuz and releases of strategic energy stocks helped contain the oil-price impact of the US-Iran war.
• •The International Energy Agency announced the largest-ever emergency releases of oil stocks in March this year, and promised to accelerate them after a meeting of oil ministers last month.
• •America's strategic petroleum reserve now stands, according to recent reports, at its weakest point since 1982.
• •And last week Donald Trump struck a deal with Vladimir Putin under which sanctions on US imports of Russian diesel would be lifted temporarily to bring down pump prices - a step analysts called of little "meaningful" effect on prices.

The fund added that inventories in energy markets are dwindling and additional geopolitical shocks could still transmit rapidly through prices and supply disruptions.

The forecasts behind the warning

The global economic growth forecast was revised up marginally to 3.1% for this year, against 3% in the July update, while next year's projection is unchanged at 3.4%.

• •US growth remains at 2.3% this year, revised up to the same pace for 2027 from 2.2%.
• •UK GDP growth is forecast at 1.3% this year, up 0.3 percentage points from July - welcome news for the chancellor, John Healey, who is set to arrive in Bangkok later this week.
• •The IMF cut its UK forecast for next year modestly to 1.2%, from 1.3%.
• •For 2027, UK growth is likely to "edge down", the fund said, "as higher energy prices and long-term interest rates weigh on consumption and investment".

On prices, the global inflation forecast holds at 4.7% for this year, the same level as in July, declining to 4.1% in 2027 - a figure revised up from 4% previously.

Risks the IMF flags

The fund said risks are skewed to the downside, particularly a prolonged stalemate or further escalation in the Middle East driving higher energy and food prices. Further disruptions to energy infrastructure, cyber-attacks or extreme weather events could amplify these effects, it said.

There is little sign of a peace agreement: Trump has continued to insist he could launch another wave of attacks on Iran in the coming weeks. The IMF also pointed to the continuing risk of an AI-driven market crash.

On monetary policy, the fund urged central banks not to overreact to short-term inflation jumps but to respond quickly if inflation appears to become entrenched, noting that "With economic conditions in flux, agility is at a premium".

IMF managing director Kristalina Georgieva, amid rising global debt levels, urged governments to tighten their belts. She said:

The IMF and World Bank annual meetings in Bangkok continue this week, where the chancellor John Healey is due to arrive later in the week.