The IMF raised its 2026 global growth forecast to 3.1% on 13 October, as AI investment offsets higher oil and gas prices. Just 32 countries now account for 95% of world growth, down from 54 in April.
The International Monetary Fund now expects the world economy to grow 3.1% this year. That’s up from 3.0% in its July forecast. The World Economic Outlook, released on 13 October at the IMF and World Bank annual meetings in Bangkok, puts growth at 3.4% in 2027. Investment in AI is offsetting damage from the jump in energy prices.
In January, the IMF forecast 3.3% growth for 2026. Its April reference forecast fell to 3.1% after conflict disrupted shipping through the Strait of Hormuz. July’s update cut it again, to 3.0%. The world grew 3.5% in 2025, so this year still brings a slowdown.
Fewer economies carry the growth
Just 32 countries now account for 95% of global growth, down from 54 in April. The US and China alone make up more than three-quarters of net demand for imported chips and other AI equipment.
Deniz Igan, a division chief in the IMF’s research department, described the split. “Countries benefiting from the AI-driven investment boom or favorable terms of trade are doing relatively well,” she said. Meanwhile, “many energy importing and lower income economies are facing a much more challenging environment.”
Emerging and developing economies are forecast to grow 3.7% this year, down from 4.5% in 2025. The Middle East and Central Asia are set to contract, then rebound by 6.3% in 2027. Advanced economies edge up to 2.1%, with the US at 2.3%.
The forecast assumes oil averages $96 a barrel this year, nearly 41% above its 2025 level. It puts global inflation at 4.7%. The same price shock is set to push global emissions down this year.
Two-sided risks around AI
The IMF’s annual report estimates that AI-related technology investment added 0.5 percentage point to US GDP growth in 2025. It cites outside estimates that private AI investment worldwide will exceed $2tn in 2026. It also warns that “Payoffs from expensive, increasingly debt-financed AI investments could prove illusory.”
Igan said the “risks surrounding AI are two-sided.” Expectations could “prove too optimistic, leading to financial market corrections,” she said. She also pointed to upside if AI-driven productivity gains arrive sooner than expected.
Athanasios Vamvakidis, a deputy director at the IMF, named an AI-related stock market correction as one risk. He listed it alongside rising bond yields and cyber threats to financial systems. On the day the report came out, South Korea’s Kospi fell as much as 7% and closed 5.5% lower.
Kristalina Georgieva, the IMF’s managing director, estimates that AI will augment, downgrade or eliminate about 40% of jobs worldwide. She called it “a slow moving tsunami, but a tsunami nonetheless.” On a commercial tally by Challenger, Gray & Christmas, AI is already the reason US employers cite most often for announced job cuts this year.
Photo by İsmail Enes Ayhan on Unsplash
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