IMF raises 2026 global growth forecast to 3.1% citing AI boom

The International Monetary Fund (IMF) has raised its forecast for global economic growth in 2026 to 3.1%, up from the 3% projected in July. The IMF attributes this improvement to an AI-driven investment boom that has helped offset the economic impact of surging energy costs and the Middle East war. Despite the upgrade, growth is expected to slow from the 3.5% rate recorded last year. For 2027, the IMF kept its forecast unchanged at 3.4%.

Inflation and Energy Outlook

The IMF expects global inflation to remain at 4.7% this year, a figure maintained from its previous outlook. The fund projects inflation to ease to 4.1% in 2027, which is higher than the 3.9% estimated in July. This adjustment reflects a revised timeline for the reopening of the Strait of Hormuz. The IMF now estimates the strait will reopen in March 2027, with conditions returning to a pre-war state by October 2027. Previously, the fund had estimated a mid-July reopening with pre-war conditions by March 2027.

According to the IMF, Gulf crude exports averaged 88% of pre-conflict levels in September as traffic picked up. However, the fund warned that global oil reserves are being drawn down by about 2.7 million barrels a day, nearing levels that could trigger sharp price moves. The IMF noted that "use of buffers and adaptability have helped economies weather the negative shocks," but stated that this cushion is "rapidly narrowing" in the near term.

Uneven Global Growth

The IMF highlighted that global growth is becoming increasingly uneven, with 32 economies now accounting for 95% of global growth, down from 54 in April. Countries with limited exposure to the war-led supply shock and strong ties to AI-led demand are performing better.

• South Korea: The IMF raised South Korea's 2026 growth forecast to 3.3%, up from 1.1% in 2025, driven by semiconductor demand. The 2027 forecast was also raised to 2.8% from 2.5%.
• United States: The U.S. is projected to expand 2.3% in both 2026 and 2027, supported by private consumption, fiscal policy, and tech investment.
• China: China is forecast to grow 4.5% this year and 4.0% in 2027, weighed down by higher oil prices and structural headwinds.
• Euro Zone: The euro zone is estimated to grow just 1.1% this year amid higher energy costs and weak consumer confidence.
• Middle East and Central Asia: This region is projected to contract 0.3% this year, with Bahrain, Iraq, Kuwait, and Qatar facing double-digit declines.

"The global economy is not simply slowing or accelerating; rather, growth is being reallocated across countries according to their exposure to the war-induced supply shock and AI-related demand strength," the IMF said.

AI Risks and Fiscal Constraints

While AI investment has supported resilience, the IMF warned it is also adding to inflationary pressures and financial fragility. The fund described the current trend as "a large, front-loaded demand shock" where massive investment is flowing into semiconductors, data centers, and power generation before broad productivity gains have materialized. The IMF cautioned that if AI productivity gains fail to materialize, U.S. equities could fall 20% and global growth could end up 1.1% below baseline estimates by 2028.

Fiscal constraints remain a significant concern. Public debt in advanced economies is projected to reach 115% of GDP by 2031, up from 108% in 2025. In emerging and developing economies, debt is forecast to climb to 84% from 74%. The IMF urged governments to keep support for households facing higher energy and food costs "temporary, targeted, and nondistortionary."

Why it matters

The IMF's revised forecast underscores the growing divergence in the global economy, where nations integrated into AI supply chains are outperforming those reliant on traditional energy imports or facing direct war impacts. The reliance on AI investment to offset geopolitical shocks introduces new risks, as the fund warns that a potential correction in AI-related equities could significantly dampen global growth. Additionally, the narrowing of energy buffers and rising public debt levels limit the ability of governments to respond to future economic downturns.

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Sources

• cnbc.com: IMF lifts 2026 global growth forecast as AI boom offsets war hit
• en.sedaily.com: IMF Lifts Korea's 2026 Growth Forecast to 3.3% on Chip Exports - Seoul Economic Daily
• businesstoday.in: IMF raises India's growth forecast to 7% for 2026, upgrades outlook by 60 BPS - BusinessToday

This article was drafted with AI assistance and checked against the sources above. Company claims are reported as claims. Cover image is AI-generated.