IMF raises 2026 global growth forecast to 3.1% on AI investment, warns of risks

Forecast raised on AI investment

The International Monetary Fund raised its 2026 global growth forecast to 3.1% from 3.0% in July, in a World Economic Outlook released on Tuesday, 13 October, as finance leaders gathered in Bangkok for the annual meetings. The 2027 forecast stays at 3.4%, flat with July and up 0.2 percentage point from April. Strong investment in artificial intelligence infrastructure has offset the energy shock from the Middle East war, with upgrades for countries supplying AI hardware, including South Korea, Malaysia, Mexico and Thailand. Oil has stayed above $100 a barrel, and the 2026 forecast remains below the 3.5% global growth recorded in 2025.

Downside risks and a two-speed world

Silvana Tenreyro, the IMF's new chief economist, told reporters:

The global economy has been resilient, but that resilience is under strain, with risks to growth tilted to the downside.

She warned that a prolonged Middle East conflict could add pressure on inflation and slow growth, and listed fiscal strains, a reassessment of AI profitability and extreme weather as further threats to the outlook. The IMF also describes a growing divide: just 32 countries now account for 95% of global growth, compared with 54 in April. It has downgraded 47% of economies since April, and the Gulf countries were hit hardest. Petya Koeva Brooks, the IMF's deputy research director, told Reuters that reserve drawdowns, supplier substitution and lower oil demand kept global growth from falling to 2.5% this year, but that their effect is fading as the war drags on.

Regional and country forecasts

The Middle East and Central Asia is the only region expected to contract in 2026, with GDP forecast to shrink 0.3%, down from a 1.9% expansion projected in April. The IMF cited prolonged disruption to shipping in the Strait of Hormuz, which normally carries one-fifth of global oil supplies. Kuwait, Iraq and Qatar face the steepest contractions, forecast at 16.7%, 16% and 15.6%. Saudi Arabia, which has partly offset the hit by boosting oil exports through the East-West pipeline, is estimated to contract 3.3%.

Among other economies, the United States is forecast to grow 2.3% and China 4.5%, while the eurozone is estimated at 1.1%. The UK forecast rose to 1.3% this year from 1.0% in July and 0.8% in April, before slowing to 1.2% in 2027 as higher energy prices and long-term interest rates weigh on consumption and investment. Sub-Saharan Africa is forecast to grow 4.5%, and Latin America and the Caribbean 2.3%.

Debt, jobs and tax revenue

Public debt is rising even in advanced economies, and the IMF urges governments to cut spending and manage borrowing better, a difficult balance for developing countries. Kristalina Georgieva, the IMF managing director, opened the Bangkok meetings by describing AI as a slow-moving tsunami that could affect 40% of jobs worldwide. The IMF stresses that this does not mean four in ten jobs disappear, but that tasks could be transformed rather than replaced. If wage income shifts to corporate profits, governments could collect less in taxes and social contributions. The IMF suggests taxing profits and rents more effectively, curbing profit shifting to low-tax countries and strengthening social protection, while cautioning against a robot tax that could deter investment. Georgieva also warned that a loss of investor confidence could pose risks to financial stability after this year's AI boom.