The Monetary Fund: “The world economy is still growing, but the risks are increasing”

BANGKOK – The world economy is resisting wars, energy crises and trade tensions better than expected just three months ago: this year it will grow by 3.1%, a very slight improvement compared to the 3% forecast in July. But “this resilience is under pressure, with risks tilted to the downside,” warns Silvana Tenreyro, the new chief economist of the International Monetary Fund. And Italy, even if it sees an upward revision of its estimates coming, remains among the slowest European countries: GDP will increase by 0.8% this year, compared to the 0.5% forecast in July, but only by 0.6% in 2027. This is the snapshot of the new "World Economic Outlook", presented today in Bangkok.

The global economy seems to be holding up for now and "there are two fundamental forces that determine these prospects", explains Tenreyro. «The first is the increase in prices of energy and other raw materials caused by the war, which acts as a negative global supply shock. The second is the technological boom, driven above all by artificial intelligence, which acts as a positive shock to demand." But the not-so-great news is that “while these two forces push economic activity in opposite directions, they both put upward pressure on inflation.”

The comparison between the three large economic areas speaks for itself. The United States will grow by 2.3% both this year and in 2027, China will slow down from 4.5 to 4%, while the euro zone will stop at 1.1% in 2026 and 1.2% in 2027. Compared to July, the American and European prospects improve slightly, while the Chinese ones decline. But the picture does not change: America continues to grow at double the rate of Europe, while China is racing, but losing speed.

What explains American resistance are above all the solidity of consumption, public spending, still favorable financial conditions and technological investments. The United States also experiences relatively little direct impact from the war in the Middle East, thanks to its position as a net energy exporter. The case of China is different, where the slowdown reflects weak domestic consumption, struggling investments and a still unresolved real estate crisis. Exports continue to support activity, but are not enough to offset the weakness in domestic demand. However, Beijing remains, together with India, one of the main drivers of Asian growth.

In the eurozone, however, the contradictions of the world economy present themselves without filters. Stunted European growth, explains the report, depends "on the persistent brake exerted by higher energy prices and weak consumer confidence". Europe imports energy, participates only to a limited extent in the great cycle of investments in artificial intelligence and at the same time must face the problem of public budgets under pressure. An uninspiring picture, starting from Italy. The improvement in estimates for this year does not change the underlying problem: the country continues to grow less than the European average and a new slowdown is expected in 2027. Inflation is also biting again: from 1.6% in 2025 to 3.3% this year, before falling to 2.8% in 2027. Unemployment should instead reduce from 6.1% in 2025 to 5.6% this year, before rising slightly to 5.8% next year.

It is now above all Germany that is "pulling": after the near stagnation of 2025, with growth of 0.2%, GDP should increase by 1.3% this year and 1.1% next year. The improvement compared to July is significant, especially for 2026, with six decimals more. The situation in France is much more difficult: GDP will grow by only 0.4% this year and 0.7% next year, two decimals less than the July forecasts in both cases. It is the worst result among the four main eurozone economies and comes as Paris faces the problem of fiscal consolidation. Spain, however, remains the European exception. Madrid will grow by 2.5% in 2026 and 1.8% in 2027. The Fund improves its forecast for this year by four decimal places, confirming the strength of an economy that does not, however, save political stability in Madrid.

All these economies are also affected by inflation, which in the eurozone is expected to reach 3.1% in 2026, before falling to 2.8% in 2027. And above all the rise in the cost of money. Tenreyro identifies three causes: the greater demand produced by investments in artificial intelligence and public spending, the energy inflationary shock and the higher premiums that investors ask for to buy government bonds. It would be up to central banks to apply the brakes by raising rates: "In principle, monetary policy should be more restrictive to ensure that inflation returns to target." But when faced with an energy shock, Tenreyro continues, "this result is achieved by limiting demand and therefore worsening the fall in economic activity caused by the shock itself".

In the background - for everyone - the problem of public finances remains above all. “Countries with high debts and deficits need to initiate fiscal consolidation and ensure that deficits and, ultimately, debt are on a downward trajectory,” Tenreyro says. An indication that also directly concerns Italy, although it is not explicitly mentioned: «The increase in financing costs and interest payments can take away space for essential spending in other sectors and reduce the budgetary margins available to face future shocks».