AI Investment Boosts Global Development, But War and Debt Threaten the Forecast, According to the IMF
The global economy will still manage to surpass 3% real GDP growth this year as robust AI investment offsets the energy shock from the war in the Middle East, but downside risks are growing and more countries are being left behind and vulnerable to rising debt loads, the International Monetary Fund said Tuesday.
Even with a prolonged conflict that has pushed oil prices above $100 a barrel, the IMF expects the global economy to expand by 3.1% in 2026, slightly higher than the 3.0% it estimated in July.
The World Economic Outlook estimate, released as world economic and finance leaders assemble in Bangkok for the IMF and World Bank annual meetings, broadly aligns with the most upbeat scenario published in April but falls short of the 3.5% global growth forecast for 2025.
The IMF’s global growth prediction for 2027 is 3.4%, unchanged from the July forecast and 0.2 percentage point higher than in April.
The minor upgrade is mostly due to continued strong investment in artificial intelligence infrastructure, which has led to growth upgrades for key advanced economies building AI platforms and particularly for countries supplying AI hardware, such as South Korea, Malaysia, Mexico and Thailand, the host country this week.The global economy has been resilient but that resilience is running out of steam, so we need to move from coping to rebuilding,” Silvana Tenreyro, the IMF’s chief economist, said at a news conference. “We need to restore fiscal space. We have to bring back supply-side resilience.”
The biggest downside risks to growth are a prolonged and more intense war in the Middle East that causes inflation pressures to spike, higher bond yields that increase government borrowing costs, El Niño-driven extreme weather events and a reassessment of AI profitability that causes investment and asset prices to collapse, she said.
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