"Al-Shal": Asia Leads Global Growth Despite Tensions
The weekly “Al-Shal” report stated that the International Monetary Fund (IMF) did not materially change its forecasts for global economic performance in its July report compared to its April report. It projects global economic growth for 2026 at 3.0%, down from 3.5% in 2025 and from 3.1% in its April report. Growth in advanced economies is expected to reach approximately 1.7% this year, a slight decline from the 1.8% forecast in the April report. This is because the group’s largest economy, the United States, is expected to maintain its projected growth rate of 2.3% in both reports, which is higher than the growth rates of its peers in the advanced economies group.
The weakness in the group’s growth rates is attributed to the sluggish growth expected in the Eurozone, where the economy’s growth for the current year is estimated at around 0.9%, down from 1.4% in 2025 and from 1.1% in the April report. The report noted that the IMF estimates China’s economic growth at around 4.6%, down from 5.0% in 2025, but up from 4.4% in the April estimates, indicating that it has absorbed some of the shock from geopolitical events and rising energy prices.
The highest projected growth rates for a major economy belong to India, with growth estimated at around 6.4% this year, although this remains lower than the approximately 7.7% achieved in 2025. This is due to India’s reliance on the Strait of Hormuz for about 50% of its energy needs, and it does not appear to have sufficient strategic reserves to buy time to partially mitigate the impact of reduced imports from that route.
If we compare economic growth rates between advanced economies in the West and their counterparts in Asia, specifically China and India, geopolitical events or a regional war and the closure of the Strait of Hormuz may have slightly accelerated the shift of economic weight from the West to the East. The figures still suggest that China’s economy, the world’s second-largest, will continue to grow at approximately twice the rate of the US economy, the world’s largest. Meanwhile, India’s economy, the world’s fifth-largest, is expected to grow at a rate approximately 9.1 times that of Germany’s economy, the world’s third-largest, which is projected to grow by around 0.7% in 2026, and about 6.7 times its growth expectations for 2027.
The IMF’s report typically does not include projected growth rates for Gulf Cooperation Council (GCC) countries in its July edition, but it makes an exception for Saudi Arabia, possibly because it is among the world’s top 20 economies. The IMF projects Saudi Arabia’s growth in 2026 to reach 1.7%, down from 4.6% in 2025 and from the 3.1% rate in the previous April report. However, it expects the Saudi economy to grow by around 5.5% in 2027.
It is worth noting that the margin of error in these estimates is significant, whether between reports or regarding future growth. For instance, the IMF bases its forecasts on the anticipated reopening of the Strait of Hormuz in the middle of the current month and the resumption of traffic through it to pre-war levels by March 2027.
