{"id":2597,"date":"2026-10-13T10:04:12","date_gmt":"2026-10-13T05:04:12","guid":{"rendered":"https:\/\/ipp-news.com\/?p=2597"},"modified":"2026-10-13T10:04:12","modified_gmt":"2026-10-13T05:04:12","slug":"ai-investment-props-up-global-growth-but-war-and-debt-threaten-outlook-imf-says","status":"publish","type":"post","link":"https:\/\/ipp-news.com\/?p=2597","title":{"rendered":"AI investment props up global growth, but war and debt threaten outlook, IMF says"},"content":{"rendered":"
\n

The global economy will still manage to top 3% real GDP growth this year as strong AI investment offsets the energy \u200bshock from the war in the Middle East<\/a>, but downside risks are mounting, and more countries are being left behind and vulnerable to rising debt loads, the International Monetary Fund said on Tuesday.<\/strong><\/p>\n

Despite a more protracted \u200cconflict that has kept oil prices above $100 a barrel, the IMF is forecasting 2026 global growth at 3.1%, a slight uptick from the 3.0% it predicted in July<\/a>.<\/p>\n

The World Economic Outlook forecast, released as global economic and finance leaders gather in Bangkok for the IMF and World Bank annual meetings<\/a>, is about even with the most optimistic scenario<\/a> issued in April but below 2025 global growth of 3.5%.<\/p>\n

For 2027, the IMF predicts 3.4% global growth, flat with the July forecast and up 0.2 percentage point from April.<\/p>\n

The slight improvement is largely due to continued strong investment in artificial intelligence infrastructure, prompting growth upgrades for key advanced economies building \u200bAI platforms and especially for countries supplying AI hardware, including South Korea, Malaysia, Mexico and Thailand, which is hosting the meetings this week.<\/p>\n

\u201cThe global economy has been resilient, but that resilience is reaching its limits, so we need to move \u200bfrom just coping to rebuilding,\u201d the IMF\u2019s chief economist, Silvana Tenreyro, told a news conference. \u201cWe need to restore fiscal space. We need to rebuild supply-side resilience.\u201d<\/p>\n

She said major downside risks \u2060to growth include a prolonged, intensified war in the Middle East that spikes inflation pressures, rising bond yields that raise government borrowing costs, El Nino-driven extreme weather events and a reassessment of AI profitability that craters investment and asset prices.<\/p>\n

Countries and companies \u200bmoved quickly to mitigate the oil price shock, drawing down reserves, substituting other suppliers and energy sources and cutting oil demand, Petya Koeva Brooks, the IMF\u2019s deputy research director, told Reuters in a separate interview.<\/p>\n

She said global growth would have fallen to 2.5% this year \u200bwithout these measures, but their effect is fading as the war drags on.<\/p>\n

The IMF noted a growing divergence between countries benefiting from AI and those bypassed by it. Just 32 countries now account for 95% of global growth, compared to 54 countries in April.<\/p>\n

Downward growth revisions have become more widespread, with the IMF downgrading 47% of economies since the April forecasts were issued, including several energy importers outside AI value chains.<\/p>\n

Hardest hit by downgrades were the Gulf countries directly impacted by the US-Israeli war against Iran, with Saudi Arabia\u2019s GDP now forecast to contract 3.3% this year compared with the \u200b1.7% growth predicted in July.<\/p>\n

Iran, Iraq, Kuwait, Qatar and the United Arab Emirates are also expected to fall into deep recessions, with 2026 contractions of 7.6%, 16%, 16.7%, 15.6% and 3.9%, respectively.<\/p>\n

<\/a>United States flat, Improvement in Europe<\/h3>\n

Among major economies, the IMF forecast US \u200bgrowth of 2.3% for both 2026 and 2027, unchanged for this year and 0.1 percentage point higher for next year.<\/p>\n

The US economy is expected to be supported by robust private consumption, tax cuts and AI investment, though the boost from AI will be offset by its large \u200cimport content.<\/p>\n

Eurozone growth for 2026 was upgraded to 1.1% from 0.9% in July due to stronger investment in AI, participation in AI value chains such as chemical production in Germany, and higher defence spending in EU countries.<\/p>\n

Britain\u2019s 2026 growth forecast was also upgraded by 0.3 percentage points from July to 1.3% due to larger AI investment.<\/p>\n

The IMF forecast China\u2019s growth at 4.5% for 2026 and 4.0% for 2027, both down 0.1 percentage point from July, as higher oil prices exacerbate weak domestic demand despite strong exports.<\/p>\n

India remains the world\u2019s fastest-growing major economy at 7.0% for both 2026 and 2027, up 0.6 percentage point this year and 0.3 percentage point next year compared with the July forecasts amid robust domestic demand, services activity and AI investment.<\/p>\n

The AI investment surge is projected to keep upward pressure \u200bon prices, with global headline consumer price inflation forecast at 4.7% \u200bin 2026 and 4.1% for 2027.<\/p>\n

<\/a>Energy price, AI risks<\/strong><\/h3>\n

Participants at \u2060Energy Pricethe IMF and World Bank meetings in Bangkok will be assessing a precarious outlook. The IMF forecasts are based on assumptions that the Strait of Hormuz will reopen in March 2027, with a broad return to pre-war shipping conditions occurring by October 2027.<\/p>\n

The IMF assumes an average oil price of $96 per barrel for 2026 and $87 in 2027.<\/p>\n

But under an adverse scenario highlighted in the \u200breport, in which a worsening war pushes oil prices to $130 per barrel through the first quarter of 2027, growth would be reduced by 0.2 percentage points in 2026 and 0.5 percentage \u200bpoints in 2027. Inflation in 2027 \u2060would surge by another 1.1 percentage point to 5.2%.<\/p>\n

AI is also a huge source of uncertainty, with major downside and upside risks, the IMF report said.<\/p>\n

Under a scenario of faster adoption of the technology and accelerated investment, global GDP could rise a further 0.6% by 2029, with the bulk of the benefits going to the US and China.<\/p>\n

But if productivity gains from AI fail to materialise, prompting a sharp decline in investment, US GDP could fall by 0.8% directly, causing spillovers to Asian technology exporters with a total direct GDP impact of as \u2060much as 0.4% \u200bby 2028.<\/p>\n

This shift would also trigger a sharp reduction in asset prices and tighter financial conditions that cause a major drop in consumption, particularly in the \u200bUS, the IMF said. Higher global bond yields would further reduce activity, with a combined global output reduction of 1.1% by 2028, including a 1.8% drop in US output.<\/p>\n

The IMF also warned that elevated public debt levels, particularly in advanced economies, increase the risk of sharply higher borrowing costs that can weigh on growth \u200bprospects.<\/p>\n

It urged governments to stop delaying action to rebuild fiscal buffers and articulate credible medium-term plans to bring debt back to sustainable levels \u2014 advice that IMF officials plan to push<\/a> at the Bangkok meetings.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The global economy will still manage to top 3% real GDP growth this year as strong AI investment offsets the energy \u200bshock from the war in the Middle East, but downside risks are mounting, and more countries are being left behind and vulnerable to rising debt loads, the International Monetary Fund said on Tuesday. Despite a more protracted \u200cconflict that has kept oil prices above $100 a barrel, the IMF is forecasting 2026 global growth at 3.1%, a slight uptick from the 3.0% it predicted in July. The World Economic…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[19],"tags":[],"class_list":["post-2597","post","type-post","status-publish","format-standard","hentry","category-english"],"gutentor_comment":0,"_links":{"self":[{"href":"https:\/\/ipp-news.com\/index.php?rest_route=\/wp\/v2\/posts\/2597","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ipp-news.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ipp-news.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ipp-news.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ipp-news.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2597"}],"version-history":[{"count":0,"href":"https:\/\/ipp-news.com\/index.php?rest_route=\/wp\/v2\/posts\/2597\/revisions"}],"wp:attachment":[{"href":"https:\/\/ipp-news.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2597"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ipp-news.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2597"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ipp-news.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2597"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}