International Monetary Fund

Rising bond yields are adding pressure on public finances already strained by debt approaching its highest since World War II. High debt, spending pressures, and large future borrowing are among the forces pushing yields higher. As higher rates feed into budgets, interest bills are becoming a larger claim on public resources. That leaves less room for public investment and social spending, and less capacity to respond to the next downturn, just as demands from defense, energy security, and aging populations are mounting. The pressure doesn't stay at home: higher benchmark yields can spill across borders and worsen debt dynamics in other economies. The latest Fiscal Monitor blog explains how putting fiscal policy on a credible path now can help contain borrowing costs and avoid a larger adjustment later: https://lnkd.in/eN5iaMwr

The latest World Economic Outlook finds that the global economy remains resilient, but sustaining that resilience is becoming increasingly costly. Growth is projected at 3.1% in 2026 and 3.4% in 2027, as the war in the Middle East weighs on activity through higher energy and food prices, while AI-related investment provides an offsetting boost. Inflation is also projected to rise to 4.7% in 2026 before easing to 4.1% in 2027. Risks remain tilted to the downside, including renewed escalation in the Middle East and a reassessment of AI-related expectations. But upside risks are also present if AI investment proves more persistent, productivity gains materialize faster, trade arrangements improve, and higher fossil fuel prices accelerate investment in energy security. The policy priorities are to rebuild fiscal space, strengthen energy security, improve AI readiness, and keep trade and cooperation channels open. https://lnkd.in/dnm2nXnH

IMF Growth Forecast 2026: 🇺🇸 US: 2.3 % 🇩🇪 Germany: 1.3% 🇫🇷 France: 0.4% 🇮🇹 Italy: 0.8% 🇪🇸 Spain: 2.5% 🇬🇧 UK: 1.3% 🇯🇵 Japan:0.7% 🇨🇦 Canada: 1.1% 🇨🇳 China:4.5% 🇮🇳 India: 7.0% 🇷🇺 Russia:0.9% 🇧🇷 Brazil: 2.2% 🇲🇽 Mexico: 1.5% 🇸🇦 Saudi Arabia: -3.3% 🇳🇬 Nigeria: 4.2% 🇿🇦 South Africa: 1.0% https://lnkd.in/dnm2nXnH

As many countries face tighter fiscal constraints and risking debt burdens, supporting growth has become more challenging. The IMF's latest Fiscal Monitor analytical chapter, “Taxing Better to Boost Growth,” finds that revenue-neutral tax reforms can encourage investment, innovation, and firm growth, while preserving revenues without worsening inequality. Read the full chapter here: https://lnkd.in/ekpwiwnf

Cost-of-living crises fall disproportionately on lower-income households, who devote a larger share of spending to basic necessities and experience significantly higher inflation than higher-income households. During past episodes, many countries relied heavily on broad-based price-suppressing interventions. New World Economic Outlook research finds that targeted transfers are the most cost-effective way of supporting vulnerable households by preserving price signals, facilitating necessary adjustment in demand, and safeguarding critical fiscal space. Learn more about how governments can better protect vulnerable households. https://lnkd.in/dnm2nXnH

As capital becomes more mobile, governments face a difficult balancing act: attracting investment while preserving the revenues needed to support growth and development. Stronger anti-avoidance frameworks can help ease these trade-offs, especially in emerging market and developing economies that rely more heavily on corporate tax revenues. Anti-avoidance is also changing tax competition, with less pressure on headline rates, and multinationals increasingly reporting profits where real activity takes place. https://lnkd.in/dnm2nXnH