Commodity-importing emerging market and developing economies face the sharpest toll from the war in West Asia, the International Monetary Fund said at its Spring Meetings in Washington on April 15.
Growth Projections Cut
The IMF projects EMDE growth will fall to 3.9 percent in 2026 and 4.2 percent in 2027, a significant downgrade from pre-conflict forecasts. The fund warned that currency depreciation could exacerbate the impact of higher energy and food prices on these economies.
Country-level cuts were equally sharp. China’s growth projection was reduced to 4.4 percent for 2026 and 4.0 percent for 2027. India was cut to 6.5 percent for both years. The broader emerging and developing Asia region was pegged at 4.9 percent for 2026 and 4.8 percent for 2027.
Sri Lanka Implications
The downgrade carries direct implications for Sri Lanka, a commodity-importing developing economy whose fuel, food and input costs have all risen sharply since the West Asia conflict escalated. The currency depreciation risk flagged by the IMF is particularly acute for a country that depends heavily on petroleum imports and has seen rupee weakness throughout 2026.
The projections compound the IMF’s earlier adverse scenario analysis, which modelled global growth falling to just 2.0 percent under severe conditions. IMF Managing Director Kristalina Georgieva separately warned against blanket fuel subsidies at the same meetings, urging governments to protect vulnerable populations through targeted measures instead.
China and India are Sri Lanka’s largest trading partners, meaning the growth cuts to both economies could reduce demand for Sri Lankan exports and slow the recovery trajectory at a time when the IMF programme review remains the anchor of economic stabilisation.
