The International Monetary Fund warned that the global economy "could soon test the limits of resilience" as strategic oil reserves deplete and government budgets strain, according to its World Economic Outlook released Tuesday in Bangkok.
The IMF said global growth has withstood the Middle East conflict better than expected over the past six months. Rerouting of oil supplies away from the Strait of Hormuz and release of strategic energy stocks contained oil price impacts from the US-Iran conflict. Emergency reserves are now depleted, however, leaving governments with limited capacity to shield consumers from future price spikes.
"Without shoring up supply capacity and replenishing policy buffers, the global economy could soon test the limits of resilience," the IMF stated. "Inventories in energy markets are dwindling and additional geopolitical shocks could still transmit rapidly through prices and supply disruptions."
The International Energy Agency announced the largest-ever emergency oil stock releases in March and accelerated them after an oil ministers meeting last month. The US strategic petroleum reserve recently fell to its lowest level since 1982, signaling system vulnerability.
Silvana Tenreyro, the IMF's economic counsellor, said "the global economy has been resilient, but that resilience is reaching its limits," urging policymakers to "move from just coping, to rebuilding." IMF Managing Director Kristalina Georgieva called on governments to tighten budgets amid rising global debt.
The Fund revised global growth forecasts marginally upward to 3.1% for this year (unchanged at 3.4% for 2026) and kept US growth unchanged at 2.3% this year, revising 2027 upward to 2.3%. For the UK, the IMF upgraded 2025 growth to 1.3% from 1.2% but cut 2026 growth to 1.2% from 1.3%, citing prolonged high oil prices and rising interest rates.
The IMF identified risks as "skewed to the downside," warning of prolonged Middle East stalemate, higher energy and food prices, cyber attacks, and extreme weather. Donald Trump recently agreed with Vladimir Putin to temporarily lift sanctions on US diesel imports, though analysts said the move would have little "meaningful" effect.
Global inflation is expected at 4.7% this year (unchanged from July forecast) and declining to 4.1% in 2026, up from the previous 4% estimate. The IMF cautioned central banks against overreacting to short-term inflation while remaining ready to respond if inflation becomes entrenched. The Fund also flagged continuing AI-driven market crash risks to global stability.