Even the IMF’s new downward revisions for economic growth may be too optimistic, warns economist

Oxford Economics cast doubt on the International Monetary Fund’s latest global forecast, saying the IMF may still be underestimating the extent of a potential slowdown in 2026 as elevated oil prices and prolonged geopolitical tensions continue to threaten global growth.

In a research briefing released April 14, Ben May, director of global macro research at Oxford Economics, said the IMF expects global GDP growth to slow less sharply this year than Oxford Economics does under its own baseline scenario. According to the report, the IMF projects world GDP growth of 3.1% in 2026 on a purchasing-power-parity weighted basis, down from 3.3% in January, while Oxford Economics places comparable growth at 2.9%. In U.S. dollar-weighted terms, Oxford Economics forecasts global growth slowing to 2.4%.

“The International Monetary Fund’s latest forecasts anticipate global GDP growth slowing less sharply this year than our own baseline,” May said. “This may reflect the IMF’s forecasts being conditional on a slightly lower oil price path than ours.”

Oxford Economics said a key difference between the two outlooks lies in their assumptions for oil prices. The firm expects Brent crude to average $90 per barrel in 2026, around $10 higher than the IMF’s implied assumption. Its baseline also assumes oil prices peak at $113 per barrel in the second quarter before easing to an average of about $80 in the fourth quarter.

Despite the gap in forecasts, Oxford Economics said both it and the IMF broadly agree on the scale of downside risks facing the world economy. “However, they agree with our assessment that the downside risks are sizeable,” May said. “The higher energy prices rise and the longer they remain elevated, the greater the likelihood of non-linear spillover effects.”

The report said the IMF’s severe oil-price scenario closely resembles Oxford Economics’ own “Prolonged Iran War” scenario published in March. Under the IMF’s severe case, oil would average $110 per barrel this year before rising to $125, while its adverse scenario assumes oil averages $100 this year and $75 next year. Oxford Economics warned that if oil were to average substantially above $100 per barrel this year, the shock could be large enough to tip the world economy into recession.

“The IMF’s severe oil price scenario paints a similar picture to our own Prolonged Iran War scenario published last month,” May said. “Were the oil price to average substantially more than $100pb this year, it could plausibly push the world economy into recession.”

The report also noted that the IMF’s relatively more upbeat view largely reflects stronger expectations for advanced economies, including the United States, the eurozone, Japan and the United Kingdom, while Oxford Economics’ forecast for emerging-market growth is broadly in line with the IMF’s. For Oxford Economics, however, the central message is that energy-driven risks remain severe enough to make even the IMF’s downgraded outlook look too rosy.