Page 9 - Policy Economic Report - April 2026

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Economy in Focus

1. A snapshot of the global economy

Global economy under renewed geopolitical stress

The global economy in April 2026 finds itself at a critical juncture, once again being tested by a major
geopolitical shock arising from the escalation of conflict in the Middle East since late February 2026. This
development comes at a time when the global economy had been gradually stabilizing after a series of
disruptions over recent years, including the pandemic, supply chain realignments, tightening financial
conditions, and rising trade fragmentation. While growth in 2025 was supported by favorable financial
conditions, a relatively weaker US dollar, and sustained technology-led investment, the ongoing conflict
has emerged as a significant countervailing force. Its effects are being transmitted through commodity
markets, trade routes, inflation expectations, and financial systems, thereby introducing a fresh layer of
uncertainty into an already fragile global macroeconomic environment.

The conflict has already inflicted visible economic disruptions, including damage to infrastructure,
interruptions in maritime and air traffic, and heightened volatility in global markets. More importantly, it
has amplified systemic risks by increasing the likelihood of sustained disruptions to energy supply chains
and global trade flows.

Growth outlook: Moderation with heightened downside risks

The IMF projects global economic growth at around 3.1 per cent in 2026 and 3.2 per cent in 2027, marking
a moderation from the growth levels observed during 2024–25 and remaining below the long-term
historical average. This moderation reflects a combination of geopolitical tensions, weakening trade
momentum, and persistent inflationary pressures. Although the baseline projections suggest continued
expansion, the balance of risks has shifted decisively to the downside.

Growth Forecast for Advanced Economies

• In the United States, the economy is projected to expand by 2.3 percent in 2026, with growth
supported by fiscal policy and the lagged impact of monetary policy rate cuts in 2025, even as the
rise in trade barriers since April 2025 continues to weigh on the level of activity.

• In the euro area, growth is expected to decline from 1.4 percent in 2025 to 1.1 percent in 2026
and to 1.2 percent in 2027.

• In Japan, growth is projected to drop from 1.2 percent in 2025 to 0.7 percent in 2026 and to 0.6
percent in 2027.

• Growth in the United Kingdom is projected to slow from 1.3 per cent in 2025 to 0.8 per cent in
2026, reflecting the impact of the war and slower monetary easing, before recovering to 1.3 per
cent in 2027, albeit at a weaker pace due to persistently high energy prices.

• In Canada, growth is projected to moderate from 1.7 per cent in 2025 to 1.5 per cent in 2026,
before recovering to 1.9 per cent in 2027.

April 2026 Page | 8