HOUSTON (ICIS)–The International Monetary Fund (IMF) has lowered its 2026 forecast for global GDP growth to 3.0% – from 3.1% in its World Economic Outlook (WEO) in April, when it cut the forecast from 3.3% because of the Middle East conflict that started on 28 February.

Overall, the global economy has “weathered the shock” from the Middle East war better than initially feared, at least so far, the IMF said in its latest WEO report, released on Wednesday.

Commercial and strategic destocking have provided temporary relief from reduced energy flows, the IMF said.

It went on to caution that forward-looking indicators such as supply chain pressure and manufacturing purchasing managers’ indices (PMIs) pointed to softer momentum ahead.

The effects of the conflict were partly offset by accelerated demand-driven momentum in the global technology cycle due to advances in artificial intelligence (AI) and its adoption, the IMF said.

Impacts varied widely based on countries’ exposure to the war, and their position in the technology value chain, the IMF said.

The IMF cut the 2026 GDP growth forecasts for the Middle East and Central Asia, as well as Canada and Mexico, raised the forecast for Brazil, and left the forecast for the US unchanged.

For the Middle East and Central Asia, the IMF now expects GDP growth of 0.7% in 2026, down from the 1.9% in its forecast in the April WEO, as the closure of the Strait of Hormuz lasted longer than expected, it said.

For Canada, the IMF revised the GDP growth forecast to 1.1%, from 1.5% in April, as that country’s economy was affected by slower population growth, weak investment and trade uncertainty, it said.

In Mexico – GDP growth forecast revised to 1.2%, from 1.6% – growth would accelerate modestly amid less restrictive domestic policies, “but uncertainty will continue to constrain activity”, the IMF said.

For Brazil, the IMF raised the 2026 GDP growth forecast to 2.4%, from 1.9% in April, saying that that country’s growth was “expected to remain resilient in 2026”.

The US economy is expected to grow 2.3% in 2026, unchanged from the April forecast, with economic activity there supported by fiscal policy, accommodative financial conditions, and continued technology-related business investment and productivity strength, the IMF said.