World Economic Outlook, April 2026: Global Economy in the Shadow of War
World Economic Outlook, April 2026
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- World Economic Outlook, April 2026: Global Economy in the Shadow of War
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Bibliographic details
- Published: April 14, 2026
Key projections and overview
- Assuming the conflict remains limited in duration and scope, global growth is projected to slow to 3.1 percent in 2026 and 3.2 percent in 2027.
- Global headline inflation is projected to rise modestly in 2026 before resuming its decline in 2027.
- Slowdown in growth and increase in inflation are expected to be particularly pronounced in emerging market and developing economies.
- The estimates and projections in the April 2026 World Economic Outlook Chapter 1 and Statistical Appendix are based on statistical information available through April 1, 2026.
Downside risks and upside scenarios
- Downside risks dominating the outlook:
- A longer or broader conflict.
- Worsening geopolitical fragmentation.
- A reassessment of expectations surrounding artificial‑intelligence‑driven productivity.
- Renewed trade tensions.
- Elevated public debt and eroding institutional credibility heighten vulnerabilities.
- Upside possibilities:
- Activity could be lifted if productivity gains from AI materialize more rapidly.
- Activity could be lifted if trade tensions ease on a sustained basis.
Chapter 1 — Global Prospects and Policies (high-level findings)
- The global economy is disrupted by the outbreak of war in the Middle East, with rising commodity prices, firmer inflation expectations, and tighter financial conditions.
- Under the assumption of a limited conflict:
- Global growth: 3.1 percent in 2026 and 3.2 percent in 2027.
- Global inflation: expected to tick up in 2026 and resume decline in 2027.
- Pressures are concentrated in emerging market and developing economies, especially commodity importers with preexisting vulnerabilities.
- Policy guidance: foster adaptability, enhance credibility, and reinforce international cooperation.
Chapter 2 — Defense Spending: Macroeconomic Consequences and Trade-Offs (findings and magnitudes)
- Defense spending booms have become more frequent, especially in emerging market and developing economies.
- In a typical boom:
- Defense outlays increase by about 2.7 percentage points of GDP over two-and-a-half years.
- Roughly two-thirds of the increase is financed through deficit.
- Short-term effects:
- Defense buildups can boost economic activity (defense spending multipliers are close to 1, on average, but vary widely).
- Defense buildups also temporarily increase inflation.
- Medium-term challenges and magnitudes:
- Fiscal deficits worsen by about 2.6 percentage points of GDP.
- Public debt increases by about 7 percentage points within three years.
- External balances deteriorate.
- Wartime booms are especially costly:
- Public debt jumps by about 14 percentage points.
- Social spending falls.
- Key conditionalities: multipliers and outcomes vary depending on how spending is sustained, financed, allocated, and on the share of imported equipment.
Chapter 3 — The Macroeconomics of Conflicts and Recovery (findings and policy implications)
- Conflicts generate large and persistent output losses in economies where fighting occurs, exceeding those from financial crises or severe natural disasters, with nonnegligible spillovers to other countries.
- Losses trigger acute macroeconomic trade-offs across monetary, fiscal, and external sectors and leave long-lasting scars.
- Recoveries are slow and uneven and depend critically on sustained peace:
- Even when peace holds, recoveries remain modest relative to wartime losses.
- Recovery is led primarily by labor, while capital and productivity stay subdued.
- Policy implications for recovery:
- Early macroeconomic stabilization.
- Debt restructuring where appropriate.
- International support.
- Domestic reforms to rebuild institutions.
- Comprehensive policy packages that jointly reduce uncertainty and rebuild capital stock generate positive externalities for stronger recovery.
Policy priorities (synthesized from report themes)
- Foster adaptability in policy frameworks to respond to evolving shocks.
- Maintain credible monetary and fiscal policy frameworks to anchor expectations.
- Carefully manage trade-offs when scaling up defense spending to balance short-term demand support against medium-term fiscal, inflationary, and social spending risks.
- Reinforce international cooperation to mitigate spillovers and support recovery in conflict-affected economies.
- Prioritize early stabilization, debt solutions, international assistance, and institutional rebuilding in countries experiencing conflict to reduce scarring and support more resilient recoveries.
World Economic Outlook, April 2026: Global Economy in the Shadow of War — estimates and projections based on statistical information through April 1, 2026.
Content in this bundle
- CHAPTER 1 GLOBAL PROSPECTS AND POLICIES
- ch1onlineannex
- ch2 - 2.7 percentage points of GDP, with roughly two-thirds
- Annex Table 2.1.2. (ch2onlineannex)
- ch3
- CHAPTER 3 THE MACROECONOMICS OF CONFLICTS AND RECOVERY (Online Annex)
- commodityspecialfeature
- Dataset overview — ch1data (April 2026 WEO Chapter 1 dataset)
- WEO Chapter 2 April 2026
- Dataset overview — WEO Chapter 3 April 2026
- EXECUTIVE SUMMARY
- FOREWORD
- statsappendix - 2026. For 2026 and 2027, these assumptions imply
- tablea
- tableb
- World Economic Outlook: Global Economy in the Shadow of War (April 2026) — Preface and Chapters