IMF Expects Global Economic Growth of 3.1% in 2026 and 3.4% in 2027

The International Monetary Fund (IMF) has forecast global economic growth of 3.1% for 2026, up from its 3% projection in July, despite the ongoing conflict in the Middle East and rising energy costs, and at a rate lower than last year’s 3.5% growth.

This assessment comes in the IMF’s World Economic Outlook report, released alongside the annual meetings of the IMF and the World Bank in Bangkok, the capital of Thailand.

The IMF projects global economic growth of 3.4% in 2027, unchanged from its July estimates, but 0.2 percentage points higher than its April projections.

The slight upward revision in growth forecasts is attributed to sustained strong investments in artificial intelligence (AI) infrastructure, which have helped offset some of the negative impacts of higher energy prices and contributed to improved growth estimates for several advanced economies and countries participating in technology supply chains.

The report highlighted that South Korea, Malaysia, Mexico, and Thailand are benefiting from increased demand for devices and components used in developing AI technologies, alongside advanced economies that are building platforms and infrastructure for this technology.

It also noted a widening gap between economies benefiting from AI investments and those that have not capitalized on this boom. Only 32 countries now account for approximately 95% of global economic growth, down from 54 countries according to April estimates.

The IMF clarified that downward revisions to growth forecasts have become more widespread, with the fund lowering its estimates for about 47% of economies since its April projections, including several energy-importing countries not integrated into AI-related value chains.

Regarding global inflation, the IMF expects the general consumer price index to reach 4.7% in 2026 before declining to 4.1% in 2027, amid persistent upward price pressures linked to the AI investment boom.

On public finance, the IMF warned that rising public debt levels, particularly in advanced economies, increase the risk of sharp spikes in borrowing costs and threaten to weaken economic growth amid ongoing financial and geopolitical volatility.

The IMF urged governments “not to delay necessary measures to rebuild reserves and fiscal buffers that enable them to confront future crises, while establishing credible medium-term plans to bring public debt back to sustainable levels.”

Meanwhile, IMF Chief Economist Silvana Tenreyro told journalists that the global economy has shown resilience but is “facing increasing pressures,” with growth-related risks leaning toward the “negative” side.

Tenreyro warned that “a prolonged conflict in the Middle East could impose additional pressure on inflation and lead to a slowdown in global growth.”

The official noted that “deteriorating public finances, reassessment of AI investment profitability, and extreme weather events could further weaken economic outlooks.”

Bangkok is hosting the annual meetings of the IMF and the World Bank from October 12 to 18, with broad Kuwaiti and international participation comprising thousands of financial officials and economists from around the world to discuss global economic and financial challenges and ways to enhance monetary and investment cooperation.