IMF seems to lift its 2026 world growth forecast to 3.1% as AI offsets war

The International Monetary Fund seems to have raised its forecast for world growth this year, even as it warns that the global economy may run short of room to absorb new shocks. In its October World Economic Outlook, the fund now expects 3.1% global growth in 2026, up from the 3.0% it predicted in July, and 3.4% in 2027, flat with July, Reuters reports; CNBC and the Guardian give the same three figures, and AFP gives the 0.1-point upgrade to 3.1%. Reuters adds that 3.1% sits below 2025 growth of 3.5%. “Without shoring up supply capacity and replenishing policy buffers, the global economy could soon test the limits of resilience,” the IMF said in the report, according to the Guardian, which posted the earliest report this desk saved (02:00 UTC Tuesday, 7:00 p.m. PT Monday).

The IMF released the full report, titled “Resilience under Strain, Urgent Choices” on its release page, in Bangkok, where the fund and the World Bank hold their annual meetings this week, the Guardian and CNBC report. CNBC says finance ministers and central bank governors from the fund’s 191 members will discuss geopolitical tensions, public debt and artificial intelligence there. “The global economy has been resilient, but that resilience is under strain, with risks to growth tilted to the downside,” Silvana Tenreyro, the IMF’s new chief economist, told reporters, Reuters reports. AFP quotes a shorter version of that line, without the words “to growth,” and CNBC quotes her as saying: “The global economy has been resilient, but that resilience is reaching its limits.”

Strong investment in artificial intelligence infrastructure explains much of the upgrade, Reuters reports, with higher forecasts for advanced economies that build AI platforms and for hardware suppliers such as South Korea, Malaysia, Mexico and Thailand. CNBC says the fund described AI investment as a “demand impulse” that held up activity in the first half of the year, and that calm financial markets may partly reflect “AI-related exuberance,” in the IMF’s words. Petya Koeva Brooks, the IMF’s deputy research director, told Reuters that global growth would have fallen to 2.5% in 2026 without the steps countries took to soften the oil shock, such as drawing down reserves and switching suppliers, but that their effect fades as the war drags on.

The IMF warns that the cushion keeps shrinking, CNBC reports. Global oil reserves fall by about 2.7 million barrels a day, CNBC reports the fund as saying, and the Guardian reports the IMF’s warning that emergency stocks now run low. The forecasts assume that the Strait of Hormuz reopens in March 2027, with shipping broadly back to pre-war conditions by October 2027, Reuters and CNBC report, and that oil averages $96 a barrel in 2026 and $87 in 2027, according to Reuters. Under an adverse scenario in which oil reaches $130 a barrel through the first quarter of 2027, growth would drop by 0.2 percentage points in 2026 and 0.5 points in 2027, and 2027 inflation would rise to 5.2%, Reuters reports.

Growth looks increasingly uneven, CNBC reports. Just 32 economies now account for 95% of global growth, down from 54 in April, CNBC and Reuters report. “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,” the IMF said, according to CNBC. The Middle East and Central Asia region faces a 0.3% contraction this year, CNBC and AFP report, and Saudi Arabia’s economy should shrink 3.3% in 2026, compared with the 1.7% growth the fund predicted in July, Reuters reports; AFP describes the same change as a 5.0-percentage-point cut. CNBC reports forecasts of 10.7% growth for Taiwan and 3.3% for South Korea this year.

Among major economies, the IMF forecasts US growth of 2.3% in both 2026 and 2027, Reuters and CNBC report; Reuters and the Guardian say the 2027 figure rose by 0.1 point from July. The fund puts China at 4.5% in 2026 and 4.0% in 2027, and India at 7.0% in both years, upgrades of 0.6 and 0.3 points, CNBC and Reuters report. Euro zone growth should reach 1.1% this year, Reuters and CNBC report, with Reuters saying the fund raised it from 0.9%. For the UK, the IMF expects 1.3% growth in 2026, up from the 1% it predicted in July, the BBC reports (0.3 points higher, the Guardian says), slowing to 1.2% in 2027, both outlets report. IMF chief economist Tenreyro told BBC News: “As you know, the UK has already started the consolidation process and it is the country that basically stands out, along with India.” Chancellor John Healey said that “Britain's economy is showing strong international resilience,” the BBC reports.

On prices, the IMF forecasts global inflation of 4.7% this year and 4.1% in 2027, the Guardian and Reuters report. The outlets differ on the July baseline for 2027: the Guardian says 4%, while CNBC says 3.9%. CNBC reports that the fund’s models put the chance of global inflation above 5% in 2027 at about 35%, up from 30% in April. “With economic conditions in flux, agility is at a premium,” the IMF said, according to the Guardian, which reports that the fund urged central banks not to overreact to short-term jumps in inflation. CNBC says Tenreyro called for monetary policy to stay “sufficiently restrictive” to bring inflation back to target.

The report treats artificial intelligence as a huge source of uncertainty, with major downside and upside risks, Reuters reports. “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,” the IMF said, according to AFP. In a scenario where AI productivity gains fail to appear, US equities could fall 20% and global growth could end up 1.1% below baseline by 2028, with Asia 1.7% lower, CNBC reports; Reuters gives the same 1.1% global figure and puts the drop in US output at 1.8%. Under faster AI adoption, global GDP could rise a further 0.6% by 2029, Reuters reports.

The fund also pressed governments on debt. Public debt in advanced economies should reach 115% of GDP by 2031, from 108% in 2025, and in emerging and developing economies 84%, from 74%, CNBC reports. Rebuilding fiscal space looks “increasingly urgent,” the IMF said, according to CNBC, and Reuters says the fund urged governments to stop delaying action and set credible medium-term plans to bring debt down. Ahead of the meetings, IMF managing director Kristalina Georgieva said: “We cannot keep delaying necessary policy action – you have the tools, now have the wisdom to use them,” the Guardian reports. This desk could not open the IMF report itself (imf.org returned 403 to curl; WebFetch returned only a cached pre-release page) or the AP story (403 to curl; WebFetch timed out), and cites them through the outlets above.