The IMF’s April 2026 World Economic Outlook says the global economy has entered a weaker, more inflation-prone phase after the outbreak of war in the Middle East, with higher commodity prices, tighter financial conditions and rising vulnerability among import-dependent emerging economies. That combination is likely to weigh on grain trade and flour milling, where cost planning is becoming more difficult across energy, logistics and raw materials.

The International Monetary Fund now projects global growth at 3.1% in 2026 and 3.2% in 2027, down from 3.4% in 2025 and below pre-pandemic norms. Global headline inflation is expected to rise to 4.4% in 2026 before easing to 3.7% in 2027. The IMF says the 2026 growth forecast was revised down by 0.2 percentage point from the January 2026 update, and notes that, absent the conflict, growth this year would instead have been revised up to 3.4%. 

KEY MACRO SIGNALS

The IMF’s baseline assumes the conflict remains limited in duration and scope. Even under that assumption, the institution says the global economy is being tested by rising commodity prices, firmer inflation expectations and tighter financial conditions. Pressures are concentrated in emerging market and developing economies, especially commodity importers with preexisting vulnerabilities. The IMF’s projection table shows growth in that country group slowing from 4.4% in 2025 to 3.9% in 2026, before a partial recovery to 4.2% in 2027. Advanced economies, by contrast, are projected to grow 1.8% in 2026 and 1.7% in 2027. 

The report also underlines how much of the current deterioration is tied to the war shock rather than to an already weak base. In its accompanying commentary, the IMF says the pre-conflict outlook had been improving thanks to lower-than-expected US tariffs, some fiscal support, favorable financial conditions and strong productivity gains. That momentum, it says, was interrupted by the conflict and the risk of a broader energy shock linked to damage in a region central to hydrocarbon supply. 

IMF's April 2026 global outlook at a glance (Source: IMF, World Economic Outlook, April 2026)

ENERGY AND PRICE ASSUMPTIONS

For commodity-sensitive industries, one of the most relevant assumptions is oil. The IMF assumes oil prices will average $82.22 per barrel in 2026 before easing to $75.97 in 2027. The IMF’s reference forecast is built on a moderate 19% increase in energy commodity prices in 2026. Its analysis warns that higher commodity prices act as a classic negative supply shock: they raise costs, disrupt supply chains, lift headline inflation and erode purchasing power. For food systems, that combination tends to weaken consumer demand in poorer importing markets while simultaneously pushing up operating costs across the chain. 

WHAT IT MEANS FOR GRAIN AND FLOUR

While the IMF report does not provide a grain-specific supply and demand outlook, its broader economic conclusions carry clear implications for the grain and flour sectors. Slower global growth typically points to weaker overall demand, but that is only part of the picture. In grain and flour markets, softer demand can coincide with rising cost pressure when energy, freight and financing remain elevated. For flour millers in particular, margin pressure often stems not only from wheat prices themselves, but from the combined effect of volatile raw material procurement costs, high utility bills, expensive logistics and limited room to pass those increases on to consumers. The IMF’s warning on tighter financial conditions adds to that pressure, as higher borrowing costs can weigh more heavily on importers, processors and traders carrying inventory.

The strain is expected to be more pronounced in import-dependent markets. The IMF notes that the impact is heavier in vulnerable economies, especially commodity-importing emerging markets. For wheat-importing countries across Africa, the Middle East and parts of Asia, this points to risks extending beyond food inflation alone. Currency weakness, higher trade finance costs and the challenge of rebuilding stocks at manageable prices could all become more prominent. Under such conditions, procurement timing, inventory discipline and freight management may prove just as critical as the direction of wheat prices themselves.

Downside scenarios and possible implications for grain trade ()

DOWNSIDE RISKS REMAIN HEAVY

The IMF says risks are “decisively on the downside.” In an adverse scenario with larger and more persistent energy price increases, global growth would fall to 2.5% in 2026 and inflation would reach 5.4%. In a more severe case involving greater damage to regional energy infrastructure, global growth would drop to about 2% in 2026, while headline inflation would rise to just above 6% by 2027. The institution adds that the hit to emerging market and developing economies would be almost twice the impact seen in advanced economies. 

For grain businesses, the downside scenario suggests that market volatility may remain high even in the absence of a fresh shock to cereal supply. Energy-related inflation, geopolitical fragmentation and tighter financing conditions could continue to influence trade flows, inventory decisions and buyer confidence. 

OUTLOOK FOR THE SECTOR

The IMF’s April outlook does not point to an abrupt breakdown in global activity. It instead suggests a more fragile operating environment, marked by slower growth, a pause in the recent disinflation trend and a widening gap between relatively resilient advanced economies and more vulnerable commodity-importing developing markets. For the milling industry, this implies that margin management may remain challenging even if grain availability itself does not tighten significantly. In that setting, energy costs, financing conditions and logistics risks are likely to remain central to the overall cost structure.

From that perspective, the IMF outlook is not only about weaker growth. It also reflects a broader return of macroeconomic instability as a more prominent factor in day-to-day commercial decisions. For flour millers, traders and food manufacturers, the near-term focus may increasingly fall on maintaining supply continuity, protecting working capital and managing cost pass-through in markets that could become more price-sensitive in the months ahead.