The global economy has avoided the sharp downturn many feared, but the apparent resilience masks a widening divide. At the IMF’s 2026 annual meetings, the fund projected world growth of 3.1% this year and 3.4% in 2027—modest figures, but stronger than some earlier expectations. The central tension is that two opposing forces are now shaping the outlook: an energy and commodity shock linked to war in the Middle East, and an investment surge driven by artificial intelligence (AI). The IMF’s October outlook describes an economy that is still expanding, but increasingly unevenly.
Two shocks, moving in opposite directions
The conflict in the Middle East has raised energy and food costs and disrupted trade routes. That operates like a classic negative supply shock: businesses pay more to produce and transport goods, while households lose purchasing power. The IMF expects global inflation to reach 4.7% in 2026 before easing to 4.1% in 2027, with higher energy and food prices among the principal drivers. IMF Managing Director Kristalina Georgieva called the war’s effect a negative energy supply shock.
AI investment is pushing in the opposite direction. Spending on data centers, advanced chips, software and power infrastructure has supported trade and capital formation, particularly in economies already integrated into technology supply chains. The IMF says this “positive AI demand shock” has helped offset part of the damage from higher energy costs. The fund identifies AI-related investment and trade as a key source of global growth.
That combination explains why headline growth has held up better than expected. It does not mean the shocks cancel each other out. AI investment benefits selected companies and countries quickly, while energy inflation spreads through economies and is especially painful for import-dependent states.
Resilience is real—but uneven
Businesses have adapted through inventory management, alternative suppliers and supply-chain redesign. Governments have also used targeted fiscal support to cushion households and firms. These adjustments, along with lower oil intensity in some major economies and flexible supply responses, have limited the immediate impact of the energy shock. New Zealand’s Ministry of Foreign Affairs and Trade summarized the IMF’s assessment of these stabilizing factors.
Yet adaptation has a cost. Rebuilding inventories, duplicating suppliers and securing energy supplies can make production more expensive even when factories continue operating. Repeated shocks also reduce governments’ room to respond. Countries that spent heavily during earlier crises now face higher borrowing costs and pressure to restrain deficits.
The distributional gap is clearest between technology-linked economies and energy importers. Countries participating in AI supply chains can attract investment, export high-value components and collect tax revenue from expanding firms. Lower-income and energy-importing economies face higher import bills, weaker external demand and greater fiscal stress. The same global cycle can therefore look like an investment boom in one country and a cost-of-living crisis in another.
The financial risk beneath the AI boom
AI’s contribution to growth is significant, but it also creates a concentration risk. Equity valuations and corporate investment are increasingly tied to expectations that AI will generate rapid productivity gains. If demand for computing capacity, chips or data-center services fails to match those expectations, investment could slow abruptly.
The IMF has warned that an AI correction could become a broader financial-market shock, particularly alongside rising sovereign bond yields and renewed trade tensions. Its outlook lists an AI-driven market correction among the principal downside risks. Supporters of the boom argue that current spending is building general-purpose infrastructure that can raise productivity well beyond the technology sector. Skeptics counter that profits, electricity demand and valuations may be advancing faster than measurable economy-wide gains.
What comes next
The near-term outlook will depend first on whether the Middle East conflict remains contained or produces a broader disruption to energy and shipping. A sustained shock would intensify inflation and force central banks to choose between supporting growth and keeping price expectations anchored. A de-escalation could allow inventories and alternative supply routes to reduce pressure more quickly.
Trade policy is the second variable. Renewed tariffs or export controls would raise costs and undermine the supply-chain adjustments that have helped the economy absorb recent shocks. Conversely, more predictable trade rules could turn today’s defensive investment into lasting productivity gains.
The most important test is whether AI investment spreads beyond a small group of firms and countries. If it produces broad productivity improvements, the boom could help lift medium-term growth. If returns disappoint, the adjustment would expose highly valued markets, indebted companies and governments already weakened by successive crises. For now, the IMF’s message is neither that the global economy is collapsing nor that it is secure: resilience has bought time, not removed the underlying risks.