IMF Warns Global Economy Is Nearing Limits of Resilience as Emergency Oil Reserves Run Low

Washington DC: The International Monetary Fund has warned that the global economy may soon reach the limits of its resilience, as emergency oil reserves dwindle and government budgets become overstretched by high debt and deficits.

In its twice-yearly World Economic Outlook, published Tuesday in Bangkok, where the IMF and World Bank are holding their annual meetings, the fund said global growth had held up better than feared during six months of West Asian conflict. Rerouting oil supplies away from the Strait of Hormuz and releasing strategic stocks had softened the impact of the US-Iran war on oil prices. But those emergency inventories are now depleted, the IMF said, leaving many governments with little room to shield consumers from a fresh price spike. The US strategic petroleum reserve was recently reported to have dropped to its lowest level since 1982.

The IMF nudged its 2026 global growth forecast up to 3.1% from 3% in July, keeping 2027 unchanged at 3.4%. US growth is projected at 2.3% in both years. UK growth for this year was raised by 0.3 percentage points to 1.3%, though next year’s forecast was trimmed to 1.2%. Global inflation is expected at 4.7% this year, easing to 4.1% in 2027, slightly higher than previously forecast, as elevated oil prices prolong the inflation spike.

The IMF said risks were tilted to the downside, citing a prolonged stalemate or escalation in the West Asia, attacks on energy infrastructure, cyber-attacks, extreme weather and the threat of an AI-driven market crash. It urged central banks not to overreact to short-term price jumps but to be ready to act if inflation becomes entrenched.

Ahead of the meetings, IMF managing director Kristalina Georgieva urged governments to tighten their belts and stop delaying necessary policy action.