The IMF has downgraded its 2026 growth forecast for Pacific Island economies by 0.2 percentage points to 2.6 per cent, while the 2027 projection of 2.5 per cent is unchanged, as food and fuel price shocks hit the region disproportionately. Strong tourism, remittances, donor financing and fiscal support have helped cushion the impact. IMF Deputy Director Sonali Jain-Chandra pointed to high import dependence, limited economic diversification, constrained fiscal space and climate adaptation needs as key structural challenges. IMF Asia and Pacific Department Director Krishna Srinivasan said the Fund is providing support to strengthen fiscal frameworks, acknowledging that the task is "not easy."
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The IMF says Pacific Island and low-income Asian economies face growth downgrades as energy shocks, rising fiscal pressures and uneven benefits from the AI boom widen gaps between economies. Regional growth is projected to slow from 5% in 2025 to 4.8% in 2026 and 4.4% in 2027, though Asia is still expected to contribute 68% of global growth. Cambodia, Bangladesh and some Pacific island countries have seen sizable downward revisions, while India, South Korea and some ASEAN economies benefit from technology-related investment and exports. Key risks include renewed Middle East tensions, a possible reassessment of AI gains, higher government borrowing costs and a potentially severe El Niño. Director Krishna Srinivasan urged targeted help for people affected by shocks rather than price controls, saying 'protect people and not prices'.
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IMF African Department director Zeine Zeidane warned that sub-Saharan African economies could face worsening food insecurity if new shocks keep pushing up food prices. He said grain prices have risen significantly over the past six or seven months because of higher fertilizer prices tied to the U.S.-Iran conflict and Strait of Hormuz disruptions, while attacks on Black Sea grain shipments and possible El Nino weather add further risk to output. According to the IMF's Regional Economic Outlook Update, median regional inflation is projected to rise from 3.4 percent in 2025 to 4.3 percent in 2026 and 5.0 percent in 2027, while growth is forecast at 4.5 percent for both 2026 and 2027. U.S. 10-year Treasury yields have risen by more than 100 basis points since the conflict began, raising borrowing costs for African countries. Zeidane also noted that Asian countries, especially China, have become increasingly important trading partners and financiers for Africa.
- IMF official warns of exacerbated food insecurity in sub - Saharan Africa
IMF official Zeine Zeidane warned that food insecurity in sub-Saharan Africa could worsen if new shocks keep pushing up food prices. Fertilizer prices rose sharply this year due to the U.S.-Iran conflict and disruptions around the Strait of Hormuz, while attacks on grain shipments in the Black Sea and El Nino could further reduce agricultural output. The IMF projects median inflation in the region to rise from 3.4 percent in 2025 to 4.3 percent in 2026 and 5.0 percent in 2027, with growth at 4.5 percent in both 2026 and 2027. The IMF update notes that high interest burdens, low reserves and falling aid leave little room to absorb another shock, and U.S. 10-year Treasury yields have risen more than 100 basis points since the conflict began. The IMF supports nearly 20 countries and is in ongoing discussions with about 10 others on potential new programs.
- IMF official warns of exacerbated food insecurity in sub - Saharan Africa
IMF African Department director Zeine Zeidane warned that food insecurity in sub-Saharan Africa could worsen if new shocks keep pushing up food prices, as grain prices have risen significantly over the past six to seven months because of fertilizer costs. The U.S.-Iran conflict and Strait of Hormuz disruptions drove fertilizer prices up this year, while attacks on Black Sea grain shipments and possible El Nino effects add further risk. The IMF's updated outlook projects median regional inflation rising from 3.4% in 2025 to 4.3% in 2026 and 5.0% in 2027, with growth at 4.5% in both years. U.S. 10-year Treasury yields have risen by more than 100 basis points since the conflict started, raising borrowing costs for African countries, and Zeidane said China is now the largest trading partner in almost every African country.
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