IMF raises its forecast for world growth this year but says economies will slow in 2027

IMF chief economist Silvana Tenreyro listens to questions during a World Economic Outlook press briefing at the IMF and World Bank annual meetings in Bangkok. (AFP pic)BANGKOK: The International Monetary Fund on Tuesday forecast that global growth in 2026 would slow less than previously expected due to advanced economies' "resilience" in the face of war-fuelled energy prices, but warned that low-income countries remained vulnerable to the supply shock.In its World Economic Outlook (WEO) released at the organization's Annual Meetings in Bangkok, the Fund raised its 2026 global growth forecast by 0.1 percentage points to 3.1 percent, compared to 3.5 percent growth in 2025.The IMF warned that while many advanced economies have been buoyed by rising investment in artificial intelligence (AI) technology, poorer countries that are not benefiting from that boom face stark choices as they deal with high energy prices due to the US war on Iran."The global economy has been resilient, but that resilience is under strain, with risks to growth tilted to the downside," said Silvana Tenreyro, the IMF's chief economist.'Bifurcated outlook'The US' war on Iran, launched in February, has plunged the Middle East into violence and seen global energy prices skyrocket as a result of Tehran's retaliatory actions.Prices of refined petroleum products remain between 70% and 95% above pre-war levels, putting pressure on countries dependent on energy imports for economic activity.The war is in its eighth month, and Tenreyro warned that "a prolonged conflict in the Middle East could put additional pressures on inflation and slow down growth."Energy-importing countries not exposed to the AI boom remain the most vulnerable, creating what the IMF termed a "bifurcated outlook" in its WEO report.The report detailed that the twin economic forces of the war in Iran and the AI technology boom had created a "fragmented" world economy."Headwinds from a prolonged war and persistent geopolitical tensions could revive inflationary pressures, strain fiscal and external positions, and hit energy-importing and low-income countries hardest," it said."At the same time, the current technology tailwind could stop abruptly if expectations about AI-related profits and productivity gains are reassessed, weakening investment and tightening financial conditions."Contraction here, growth thereThe IMF's split vie… BANGKOK (AP) — The International Monetary Fund on Tuesday slightly upgraded its outlook for the world economy for this year, but it’s still forecasting growth at a sluggish 3.1%.

The IMF had forecast global growth at 3.0% in July. The world economy expanded at a 3.5% annual pace in 2025. The IMF Economic Outlook predicts that growth in the United States will remain steady at 2.3% in 2026 and 2027.

It said it now expects oil prices to be up nearly 41% this year, at an average of $96 a barrel, boosting global inflation to 4.7% in 2026 from 4.1% last year. The update released Tuesday, as world economic and financial leaders gather in Bangkok for the fall meetings of the IMF and World Bank, says the boom in artificial intelligence is offsetting damage from sharply higher prices for oil and gas. AI has uneven impacts But the benefits of the AI boom are not shared equally: the U.S.

and China account for more than three-quarters of net demand for imports of computer chips and other AI-related equipment, it said. “The outlook is highly uneven,” Silvana Tenreyro, the IMF’s director of research, told reporters in Bangkok. Growth is increasingly concentrated, with 32 countries accounting for 95% of global growth, the report said.

That compares with 54 countries as of April. “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,” it says. AI’s effects on employment are a key focus of the meetings in Bangkok, which IMF Managing Director Kristalina Georgieva described during an event Monday as “a slow moving tsunami, but tsunami nonetheless.” “The impact over time on jobs globally we estimate to be around 40% — jobs either augmented or downgraded or eliminated.

And we are already seeing some of this impact,” she said. Debt remains a key concern Last week, the IMF chief urged countries both rich and poor to do a better job of improving their national finances, noting that mounting levels of debt pose a growing risk to global financial stability. That’s especially true at a time of high borrowing costs, Tenreyro said.