The global economy is entering an unusually contradictory phase: growth remains positive, artificial-intelligence investment is providing momentum, yet war-driven energy disruption and persistent inflation are eroding the foundations of that resilience.
The International Monetary Fund’s October outlook projects global growth of 3.1% in 2026, a modest improvement from its July forecast of 3%, followed by 3.4% growth in 2027. But the figures remain below the 3.5% expansion recorded in 2025, while global headline inflation is expected to rise to 4.7% this year before easing to 4.1% next year. The headline message is stability under pressure, not a return to broad-based prosperity. The IMF’s October World Economic Outlook describes an expansion increasingly shaped by forces pulling in opposite directions.
Two shocks, moving in opposite directions
The first force is the Middle East conflict and its effect on energy markets. Disruption to oil and gas shipments, including through the Strait of Hormuz, has created what IMF officials describe as a negative global supply shock: higher input costs, weaker household purchasing power and pressure on central banks to keep monetary policy restrictive.
Energy price increases reached 18.8% in September, up from 14.3% a month earlier, according to reporting by Le Monde. For energy-importing economies, the shock is particularly severe. It raises transport, food and industrial costs simultaneously, while forcing governments to choose between subsidizing consumers, protecting public finances or allowing inflation to pass through.
The second force is the AI investment boom. Spending on data centers, chips, cloud capacity and related infrastructure has lifted trade and investment, especially in economies positioned to supply the technology. The IMF says AI-related demand has become a key driver of global activity, partly offsetting the damage caused by war and expensive energy. IMF officials characterize the two developments as opposing shocks to demand, supply and prices.
Resilience is not evenly shared
Aggregate growth conceals a widening gap between countries. Advanced economies are projected to grow 2.1% in 2026, while emerging and developing economies are expected to expand 3.7%; China is forecast to grow 4.5%. Those numbers do not mean comparable living-standard gains. Economies benefiting from technology exports, strong investment or favorable commodity prices can absorb higher energy costs more easily than poorer countries dependent on imported fuel and food.
The IMF warns that the expansion is becoming increasingly concentrated in a small group of firms, sectors and economies. That concentration matters because investment booms can generate impressive short-term output without creating equally broad employment or income gains. It also leaves the world more exposed if expectations about AI profits fail to match the scale of current spending.
There are reasons for optimism. Faster productivity growth could eventually make AI more than a financial-market narrative, raising output while easing some supply constraints. The IMF identifies stronger AI investment and earlier productivity gains as upside risks. Supporters of the current build-out argue that infrastructure spending often precedes the wider adoption of transformative technologies, and that judging returns too early could underestimate the economic effects.
But the opposing case is becoming harder to dismiss. Deloitte reports rising concern that AI companies may not generate enough revenue to service the debt used to build infrastructure. Credit-default-swap prices and yields on AI-related bonds have increased, while Gartner has forecast that 80% of “neocloud” providers could cease independent operations by 2030 because capital expenditure may outrun returns. These indicators do not prove an imminent crash, but they show that financial risks are moving beyond speculative equities.
What comes next
The next phase will depend on whether the energy shock fades before it becomes embedded in wages and prices, and whether AI investment produces measurable productivity rather than only higher valuations. The IMF’s forecasts assume that oil and gas shipments through Hormuz resume by March and that AI demand moderates. A longer disruption would challenge both assumptions, keeping inflation high while weakening growth.
Policymakers therefore face a narrow path. Central banks must prevent energy-driven inflation from becoming persistent without deepening the slowdown. Governments need targeted support for vulnerable households and food-importing countries, but broad subsidies could worsen debt pressures. At the same time, regulators and investors face the task of distinguishing productive AI capacity from projects sustained mainly by easy financing and optimistic projections.
The central question is not whether the world economy is growing. It is who captures that growth, how durable it is and how much risk is being accumulated beneath it. For now, AI is helping the global economy withstand a geopolitical shock. That same dependence could become a weakness if the technology boom falters before its promised productivity gains arrive.