IMF raises 2026 global growth forecast to 3.1% on AI investment
The IMF lifted its 2026 global growth forecast to 3.1 per cent, citing AI investment, while keeping 2027 at 3.4 per cent. It cut China's outlook and warned of rising downside risks from debt and Middle East conflict.
The International Monetary Fund (IMF) has raised its forecast for global economic growth this year to 3.1 per cent, up 0.1 percentage point from its July projection of 3 per cent, citing strong investment in artificial intelligence. The outlook for next year was left unchanged at 3.4 per cent, according to the latest World Economic Outlook.
The IMF said continued heavy investment in AI infrastructure has lifted growth expectations in major advanced economies that build AI platforms, particularly AI hardware suppliers, offsetting the impact of the Middle East conflict. However, it warned that downside risks are rising, with more countries vulnerable to growing debt burdens.
Countries and companies have taken rapid action to cushion the oil price shock, including using petroleum reserves, finding alternative suppliers and energy sources, and reducing oil demand, the IMF said. Without such measures, global growth would fall to 2.5 per cent, but their effect is weakening as the Middle East war continues.
Among major economies, the IMF projects the United States economy to grow 2.3 per cent in both 2026 and 2027, with the 2026 forecast unchanged from July but the 2027 figure raised by 0.1 percentage point. The euro area's 2026 growth forecast was raised from 0.9 per cent to 1.1 per cent.
The IMF cut its growth forecasts for China for both years, to 4.5 per cent in 2026 and 4 per cent in 2027, citing weaker domestic demand due to higher oil prices.
The fund also expects higher investment to push up prices, forecasting global inflation of 4.7 per cent this year and 4.1 per cent next year. It assumes an average oil price of US$96 per barrel this year, falling to US$87 next year. But if the Middle East war worsens, pushing oil to US$130 per barrel in the first quarter of next year, global growth would fall by 0.2 percentage point this year and 0.5 point next year, with inflation rising to 5.2 per cent.
The IMF currently assumes the Strait of Hormuz will reopen in March next year, with shipping conditions largely returning to pre-war levels by October next year.