The International Monetary Fund has lifted its global growth forecast for 2026, crediting AI-driven investment with helping offset the economic damage caused by the ongoing Middle East war.
The IMF now projects the global economy will expand at 3.1% in 2026, up from the 3% estimate issued in July, though still well below last year’s 3.5% rate.
Growth in 2027 is projected to hold at 3.4%, while inflation is expected to remain elevated at 4.7% this year before easing slightly to 4.1% next year.
“The global economy has been resilient, but that resilience is reaching its limits,” said Silvana Tenreyro, economic counsellor and director at the IMF research department, urging policymakers to restore fiscal space and supply-chain security.
The IMF now estimates the Strait of Hormuz will reopen in March 2027, with conditions returning to a pre-war state by October 2027, a later timeline than previously projected.
Gulf crude exports averaged 88% of pre-conflict levels in September as shipping traffic gradually picked up, according to the international body.
The report was released at the IMF and World Bank annual meetings in Bangkok, where finance ministers and central bank governors from 191 member countries are gathered this week.
AI-related investment delivered a “demand impulse” that helped global activity in the first half of the year hold up better than expected, the IMF said, despite the Middle East conflict and ongoing trade tensions.
Financial markets remained largely calm through the turbulence, a trend the IMF said may partly reflect “AI-related exuberance” rather than underlying economic strength.
The IMF warned that global oil reserves are being drawn down by approximately 2.7 million barrels a day, approaching levels that could trigger sharp price moves in energy markets.
Growth is also becoming sharply unequal, with 32 economies now accounting for 95% of global expansion, down from 54 economies in April.
Taiwan is forecast to grow 10.7% this year, while South Korea is projected to expand 3.3%, up from just 1.1% in 2025, driven largely by semiconductor demand.
The United States is projected to expand 2.3% in both 2026 and 2027, supported by private consumption, fiscal policy, and technology investment.
The euro zone is expected to grow just 1.1% this year, hampered by elevated energy costs and weak consumer confidence, leaving it on the margins of the AI-led recovery.
India remains the fastest-growing major economy globally, with the IMF forecasting growth of 7.0% in both 2026 and 2027, driven by domestic demand, services activity, and AI-related investment.
China is projected to grow 4.5% this year and 4.0% in 2027, with higher oil prices and structural headwinds continuing to weigh on activity.
“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.
The AI investment boom is described as “a large, front-loaded demand shock” pouring capital into semiconductors, data centers, and power generation before broad productivity gains have materialized.
The IMF warned 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, with Asia 1.7% lower.
Public debt in advanced economies is projected to reach 115% of GDP by 2031, climbing from 108% in 2025, as governments face higher real interest rates and mounting defense spending pressures.
The IMF placed the probability that global inflation exceeds 5% in 2027 at roughly 35%, up from 30% in April, with overall risks described as “tilted to the downside.”
