IMF Spring Meetings: global growth slowdown may signal divergent and asymmetric effects in emerging markets
As the International Monetary Fund (IMF) convenes its Spring Meetings, the global outlook has deteriorated following the February 2026 outbreak of war in the Middle East. The latest World Economic Outlook (WEO)projects global growth to slow to 3.1% in 2026 (a 0.3% reduction from January’s forecast), reflecting the negative shock to energy markets and heightened geopolitical uncertainty. Crucially, the IMF expects growth to be slower even if the conflict de-escalates.
Meanwhile, high-frequency indicators – specifically the global Purchasing Managers’ Indices (PMIs) – are already flashing early warning signals that warrant closer attention. Taken together, they suggest a synchronised growth deceleration may already be underway, indicating that the IMF’s WEO forecasts may be too optimistic.
PMIs are information-dense and provide a real-time proxy for cyclical momentum in economic activity. For countries in Africa and Asia, manufacturing PMIs remain either below 50 (signalling contraction) or only marginally expansionary. Of particular concern are the multiple employment indices, many of which have entered contractionary territory. This may prove more consequential than the output components – employment indices often lead turning points as firms typically adjust labour inputs only when demand weakness or falling new orders are deemed to be persistent.
Global PMI output growth has moderated at a pace similar to that seen during the 2008 – 2009 global financial crisis. Both manufacturing and service sector PMIs declined in March, according to a raft of early April reports, alongside multi-year increases in reported input costs. This downturn is characterised by widespread deceleration across both the industrial and service sectors, with consumption-facing services and tourism experiencing the most significant declines.
China’s manufacturing PMI declined, signalling a slowdown, while Vietnam reported a sharp rise in input costs. In Africa, Egypt’s PMI fell to 48.0 from 48.9 – a near two-year low and deep in contraction territory. Kenya’s service sector PMI fell to a multi-month low of 47.7, also signalling contraction. Export order sub-indices across several ASEAN manufacturing PMIs show broad-based declines.
Across economies, one particularly notable development is the decline in new orders-to-inventory ratios. In several African economies, currency pass-through effects and weak external demand are compressing margins, prompting firms to reduce labour. Meanwhile, the global PMI new export orders index remains below its long-run average.
As the WEO notes, the downward growth revision amounts to 0.3 percentage points for 2026, while global headline inflation is projected to rise to 4.4%. The IMF warns that if the conflict expands, the global economy could face significantly stronger headwinds.
Under its adverse scenario (Figure 1), global growth could fall to 2.5%, with inflation rising to 5.4%. Under a severe scenario, involving prolonged damage to energy infrastructure, global growth could slow to just 2% in 2026, while global headline inflation could surge to near 6% by 2027. Such a shock would raise the cost of all energy-intensive goods – including fertilisers, chemicals, food and transport – disrupt supply chains and disproportionately penalise low-income countries with pre-existing macroeconomic vulnerabilities.
Figure 1: Annual world gross domestic product (GDP) growth and WEO forecasts