IMF October outlook: trade growth 4.6%, oil assumed near US$96, Sri Lanka 3.7% in 2027

The International Monetary Fund published its October 2026 World Economic Outlook on Tuesday 13 October, as finance ministers and central bank governors met in Bangkok for the IMF and World Bank annual meetings. The report raises the global growth forecast slightly but builds its numbers on oil near US$96 a barrel and on shipping through the Strait of Hormuz returning only next year. The Associated Press (via Fortune), TASS, 3News, EconomyNext and the Daily FT all reported on it.

According to the AP report carried by Fortune, the IMF now expects the world economy to grow 3.1% in 2026, up from its July forecast of 3.0% but below the 3.5% expansion in 2025. It forecasts 3.4% growth in 2027. Global inflation is forecast at 4.7% in 2026, easing to 4.1% in 2027.

"The outlook is highly uneven," Silvana Tenreyro, the IMF's director of research, told reporters in Bangkok, according to AP. The report says 32 countries account for 95% of global growth, compared with 54 countries as of April. AP reported that the IMF expects emerging and developing economies, which are more exposed to higher oil and gas costs, to slow to 3.7% growth this year from 4.5% in 2025, before picking up to 4.4% in 2027. The IMF forecasts India at 7% and China at 4.5% this year, and the euro area at 1.1%.

On trade, 3News reported that the IMF projects world trade volume growth to slow from 5.0% in 2025 to 4.6% in 2026, then hold at 4.7% in 2027. The Fund linked this to the drag from tariffs, the gradual reshaping of supply chains as buyers switch suppliers, and brisk growth in technology related trade.

The oil assumptions are the part most relevant to freight costs. TASS quoted the report: "The average price of oil in US dollars a barrel was $67.74 in 2025; the assumed price, based on futures markets, is $95.74 in 2026 and $87.39 in 2027." TASS reported that the baseline assumes shipping through Hormuz recovers to pre-war levels between March and October 2027. In the IMF's downside scenario, as described by TASS, if the US and Iran war is not resolved by June 2027, shipping through Hormuz and the Bab el-Mandeb Strait would be effectively paralysed and oil could climb to US$130 a barrel between the fourth quarter of this year and the first quarter of 2027. TASS also reported IMF estimates that natural gas prices will rise 48% this year and fertiliser prices about 10%.

For Sri Lanka, EconomyNext and the Daily FT reported that the IMF projects GDP growth of 3.7% in 2027, with inflation of 5.4% and unemployment of 3.9%. The Extended Fund Facility programme is expected to end in March 2027. The Daily FT noted that the World Bank recently raised its 2026 growth forecast for Sri Lanka to 4.4% from the 3.6% it projected in April.

The IMF figures came days after the World Trade Organization's own update. Xinhua, carried by China Daily, reported that on 8 October the WTO raised its forecast for 2026 merchandise trade volume growth to 3.9% from 1.9% in March, with 4.1% expected in 2027. It cut its 2026 services trade forecast to 3.3% from 4.8%, citing the Middle East conflict's effect on transport and travel. WTO Director-General Ngozi Okonjo-Iweala said the figures "reflect trade resilience in action." The IMF and WTO measure trade differently, so their numbers are not directly comparable.

All of these are forecasts, and both bodies tie their outlook to how the Middle East conflict develops. For Sri Lankan importers, an oil assumption of about US$96 for 2026 and US$87 for 2027 points to fuel costs staying well above 2025 levels in the IMF's central case. That feeds into bunker surcharges, local transport and power costs. The IMF's downside case, with both Hormuz and Bab el-Mandeb blocked, would hit routes through the Red Sea and the Gulf that Colombo cargo depends on.

For exporters, the IMF expects trade volumes to keep growing, but with growth concentrated in fewer economies and in technology goods. The slowdown in emerging economies and weak euro area growth matter for apparel, tea and rubber buyers. Higher gas and fertiliser prices are also relevant for plantation and farm costs.

Earlier posts covered the President's comments on a new IMF deal and recent oil price moves.

• Use the IMF oil assumption of US$95.74 for 2026 and US$87.39 for 2027 as one reference point when reviewing fuel related surcharges in quotes, and remember it is a forecast.
• Ask your forwarder or carrier how their bunker and emergency surcharges would change if oil moved towards the IMF downside level.
• Watch for any change in Hormuz or Bab el-Mandeb shipping, since the IMF baseline depends on Hormuz reopening from March 2027.
• If you export to the euro area or emerging markets, check buyer order outlooks against the slower growth figures the IMF published.
• Read the IMF and WTO reports directly before using any single figure in budgets or contracts.