IMF warns global economy ‘could soon test the limits of resilience’

The International Monetary Fund has cautioned that the international economy risks pushing its endurance to the limit, as emergency petroleum supplies dwindle and state finances face severe strain under heavy debt burdens.

In its latest World Economic Outlook, released on Tuesday during meetings with the World Bank in Bangkok, the fund observed that international growth had handled fallout from Middle East tensions better than anticipated over the previous half-year. Measures such as diverting maritime energy shipments away from the Strait of Hormuz and tapping strategic reserves helped cushion crude prices amid the conflict involving the United States and Iran.

However, the Washington-based institution highlighted that those emergency reserves have significantly shrunk, limiting states' capacity to shield the public from subsequent price spikes. The fund stated that failing to restore policy cushions and expand output means the international economic framework "could soon test the limits of resilience," noting that thin energy stockpiles leave the system exposed to sudden disruptions and cost surges.

Reserve levels highlight the pressure on existing buffers. The International Energy Agency conducted historic drawdowns earlier this year, while reserves in the United States reached lows not seen since 1982. A recent pact between Donald Trump and Vladimir Putin to temporarily ease import sanctions on Russian diesel was regarded by market observers as offering little tangible relief for pump costs.

Ahead of the Bangkok conference of finance leaders, IMF managing director Kristalina Georgieva called on states to rein in expenditures to address mounting sovereign obligations, emphasizing that authorities must use the fiscal tools at their disposal rather than postpone required decisions.

The fund edged its projection for world output expansion this year up to 3.1%, slightly above the 3% projected in July, while maintaining a 3.4% estimate for the following year. United States growth is anticipated to stay at 2.3% this year and register the same rate in 2027.

For the United Kingdom, the IMF raised its 2026 gross domestic product estimate by 0.3 percentage points to 1.3%. Yet, it warned that lasting energy expenses and higher borrowing rates would likely suppress consumer spending and business commitments later on, nudging the UK's 2027 projection down from 1.3% to 1.2%.

Broader risks remain tilted toward negative outcomes. The IMF cited potential prolonged conflict or further escalation in the Middle East, along with severe weather events, infrastructure attacks, or cyber threats, as factors that could worsen price pressures. It projected international inflation at 4.7% for this year, easing to 4.1% in 2027, advising monetary authorities to stay flexible without overreacting to temporary cost spikes. The report also pointed to possible financial instability linked to the artificial intelligence sector as another lingering hazard.