From April 13 to 18, 2026, the IMF held its Spring Meetings in Washington, D.C. The centerpiece of the gathering was the April World Economic Outlook (WEO) — and the number that came out of the report landed on financial terminals worldwide: 3.1% global growth for 2026. It was 3.4% in January. In three months, the IMF revised down by 0.3 percentage points.
In absolute terms, that's not a dramatic shift. But context matters: the revision comes with the Middle East conflict still active, the Strait of Hormuz operating at reduced capacity, and emerging markets under capital outflow pressure. When the IMF cuts its projection in the middle of an ongoing geopolitical shock, the signal markets read is not the number itself — it's the direction.
What Changed Between January and April
In January 2026, the IMF projected 3.4% global growth, in an environment of falling inflation and expectations of monetary normalization across developed economies. The baseline was relatively constructive: the Selic on a cutting trajectory, the Fed with two or three cuts on the horizon, China stabilizing around 5%.
The Middle East conflict, which began in February, altered that equation. The IMF identifies the war as the primary disruption driver behind the April revision. Brent went from $71 to $112 per barrel — a 58% surge in just over a month. The cascade effect is well known: more persistent inflation, more cautious central banks, tighter financial conditions, lower growth.
The Atlantic Council, which covered the Spring Meetings, summarizes the picture by economy:
| Country / Region | 2026 Growth Forecast |
|---|---|
| World | 3.1% |
| China | 4.4% |
| Brazil | 2.3% |
| United States | Slowdown (below 2%) |
| Eurozone | ~1.2% |
India still holds projections above 6%, but the standout negative is the convergence of American slowdown, weak Europe, and emerging markets under currency pressure.
The IMF's Three Scenarios
What distinguishes the April WEO from prior editions is the explicit modeling of three trajectories for the conflict. The IMF moved away from a single baseline scenario and now presents three possible paths, each with distinct growth and inflation projections.
Baseline Scenario: 3.1% growth, 4.4% inflation
The central scenario assumes the conflict does not significantly escalate from here, the Strait of Hormuz is not fully blocked, and central banks manage to contain inflationary pressure without reversing the easing cycle. Global growth reaches 3.1% and average inflation in advanced economies comes in at 4.4%.
For Brazil, the baseline is relatively manageable. The Central Bank projects the Selic at 14.75% currently — and the latest Focus Bulletin points to 12.5% by year-end, implying a cutting cycle that, under this scenario, would continue without major interruptions. The 2.3% growth the IMF projects for Brazil is in line with what the Central Bank and the domestic market already price in.
Adverse Scenario: 2.5% growth, 5.4% inflation
The adverse scenario embeds a moderate conflict escalation: more severe restrictions at Hormuz, a more prolonged oil shock, inflation that doesn't ease, and central banks that pause or reverse rate cuts. Global growth falls to 2.5% — stagnation territory by historical standards — and inflation rises to 5.4%.
For emerging economies, this scenario is particularly challenging. Capital outflows into dollar-denominated assets accelerate when the Fed signals a pause in cuts. The currencies of countries like Brazil, Mexico, and Indonesia suffer additional depreciation, which feeds domestic inflation, which pressures local central banks to delay monetary relief. It's a self-closing loop.
In Brazil specifically, an adverse scenario would mean revising the Selic projection upward from 12.5%. Copom, which already slowed its cutting pace in March (from 50bps to 25bps), would have even less room to act. Growth at 2.3% is already under pressure; any further deterioration in global financial conditions drags that number lower.
Severe Scenario: 2% growth, inflation near 6% through 2027
The severe scenario, described by the IMF in an April 14 briefing and elaborated by the ODI (Overseas Development Institute), projects global growth of just 2% and global inflation approaching 6% by 2027. That level of growth is historically associated with recessions in developed economies and significant income shocks in developing countries.
The transmission mechanism is as follows: the conflict escalates to involve more regional actors, the energy supply disruption becomes structural rather than temporary, and central banks are forced to tighten monetary policy again — even as growth falls. That's the worst of both worlds: stagflation.
For Brazilian investors, this scenario demands the most thorough portfolio reassessment. Domestic equities would suffer from below-expected growth and rates that don't come down. Short-term fixed income and inflation-linked bonds would become not merely defensive but actively advantageous. Exposure to commodity exporters would still be relevant, but with the caveat that a severe global shock reduces Chinese demand — and China is Brazil's primary export destination.
What Each Scenario Means for Brazilian Investors
I've been in the market since 2019 and have lived through at least three IMF projection revision cycles during periods of geopolitical stress. The pattern I consistently observe: the market doesn't wait for the official report to price things in. Assets have already moved before publication. The value of the WEO is not in being news — it's in being an analytical framework.
With the Selic at 14.75% and the Focus pointing to 12.5% by year-end, the domestic market is still working with the baseline scenario. But the yield curve already carries a risk premium for the adverse scenario. This shows up in credit spreads and the slope of the long end of the curve.
Fixed income: In the baseline scenario, medium-duration IPCA+ bonds (3 to 5 years) remain quality positions. In the adverse scenario, preference shifts toward shorter maturities, with lower mark-to-market risk. In the severe scenario, Tesouro Selic and daily-liquidity CDBs make sense again as liquidity parking — not for lack of options, but for timing precision.
Currency hedging: The real appreciated 6% year-to-date through April, boosted by export flows and the appeal of the interest rate differential. But in adverse and severe scenarios, the interest differential loses weight in foreign capital decisions when the dollar rises globally. Some exposure to dollarized assets — BDRs, international ETFs — functions as a natural hedge against that reversal.
Emerging markets in comparative perspective: The IMF does not project Brazil as a negative outlier. At 2.3%, the country grows above the developed-economy average. China at 4.4% sustains commodity demand in the baseline scenario. But the correlation among emerging markets during global crises is high: when global risk appetite falls, it falls for everyone simultaneously.
What to Monitor Going Forward
The Spring Meetings ended on April 18, but monitoring the data that determines which scenario materializes continues on a daily basis. The indicators that matter most:
Oil and Hormuz: Brent sustained above $120 would signal that markets are beginning to price the adverse scenario. The number of ships transiting the Strait is the most direct indicator of disruption intensity.
Copom meeting April 28–29: The Selic decision and, more importantly, the accompanying statement. If Copom signals a pause in cuts due to imported inflation, it marks a mental migration from the baseline to the adverse scenario.
Weekly Focus Bulletin: The median projection for the Selic by year-end is the best thermometer of domestic market consensus. Any move above 12.5% confirms that the market is repricing risk.
Future IMF statements: The next formal update points will be the Fiscal Monitor and Global Financial Stability Report, due to be published in the coming weeks. Any inter-edition revision to growth projections would signal an accelerating deterioration.
No portfolio is immune to severe scenarios. But there are portfolios built with awareness of the risks the IMF has already placed on the table. The work now is to calibrate allocation based on which scenario the market is pricing — and to be prepared to adjust when that pricing shifts.
Equities involve risks and past results are not a guarantee of future results. This content is informational and does not constitute investment advice.
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