The global economy is still expanding, but the headline numbers conceal a widening divide. The International Monetary Fund projects world growth of 3.1 percent in 2026 and 3.4 percent in 2027, a recovery from this year’s slowdown but a weaker performance than the roughly 3.4 percent recorded in 2024 and 2025. The central story is not simply resilience: it is the collision of an energy shock caused by war with a technology investment boom led by artificial intelligence.
That combination is producing sharply different outcomes. Economies embedded in semiconductor, cloud-computing and data-centre supply chains are benefiting from strong capital spending. Energy-importing and lower-income countries face higher fuel and food costs, tighter financing conditions and less fiscal space. The IMF describes the result as an increasingly uneven recovery, with aggregate growth offering limited reassurance to households and governments exposed to imported inflation.
Two shocks pulling in opposite directions
The war in the Middle East has raised the risk of a negative energy-supply shock. In its October outlook, the IMF forecasts global headline inflation at 4.7 percent in 2026, before easing to 4.1 percent in 2027. Persistent energy and food pressures could delay interest-rate cuts or force central banks to keep policy restrictive for longer, increasing debt-service costs for governments, companies and households.
At the same time, AI-related investment is supporting demand. Spending on advanced chips, computing infrastructure and software is lifting activity in technology-producing economies and strengthening some corporate balance sheets. This is not only a financial-market phenomenon: construction, electricity generation, engineering and industrial equipment are all being drawn into the investment cycle.
“The global economy continues to prove resilient, but this resilience is becoming increasingly uneven,” the IMF’s Deniz Igan said in an October briefing.
The tension is visible in the forecasts. The IMF’s July update attributed part of the expected rebound to accelerated, demand-driven momentum in the technology cycle, even as war weighed on activity. Its October assessment retained the basic pattern but warned that energy and fiscal buffers were being depleted.
Why the average conceals vulnerability
Global growth is an average, not a shared experience. A technology exporter can gain from rising investment while an energy importer loses purchasing power. Higher global interest rates compound the problem: countries that borrowed heavily during the era of cheap money now face larger refinancing bills precisely when public spending is needed to cushion consumers and protect investment.
The IMF has also warned that global imbalances increased again, reaching 0.7 percent of world GDP in 2025. Large trade and savings gaps can support demand in the short term, but they also make the system more exposed to abrupt shifts in capital flows, protectionism or exchange rates.
Optimists argue that the AI cycle could deliver productivity gains capable of extending the expansion. Faster automation and better use of data may lower costs, raise output and eventually broaden the benefits beyond the technology sector. A rebound to 3.4 percent growth in 2027 would support that interpretation.
Sceptics point to concentration and uncertainty. AI investment is being led by a relatively small group of firms and countries, while the payoff from the technology remains difficult to measure. If expected productivity gains fail to justify current spending, a sharp correction in technology valuations and capital expenditure could weaken the very demand now supporting global growth. The IMF’s central forecast does not imply that outcome, but its warnings about depleted buffers leave less room to absorb it.
What comes next
Policy makers face a difficult balancing act. Central banks must prevent renewed inflation from becoming entrenched without unnecessarily deepening the slowdown. Governments must protect vulnerable households while avoiding subsidies that worsen fiscal pressures or suppress incentives to conserve energy. For poorer countries, expanded access to concessional finance and debt restructuring may matter more than marginal changes in domestic policy.
Technology policy will also shape the distribution of gains. Export controls and investment restrictions may address security concerns, but a recent analysis from the Center for Strategic and International Studies argues that broad or frequently changing controls can reduce revenues for firms, encourage technological substitution and complicate cooperation with allies. Its proposed alternative is a targeted approach combined with sustained research, talent, manufacturing and international collaboration.
The near-term test is whether the energy shock fades before inflation expectations rise materially, and whether AI investment translates into productivity rather than a narrow asset boom. If both conditions hold, the global economy could achieve the IMF’s projected rebound. If either fails, the apparent resilience of 2026 may prove less durable than the headline growth rate suggests.
Sources: IMF, World Economic Outlook, October 2026; IMF, Annual Meetings policy briefing, October 2026; Center for Strategic and International Studies, “Rethinking Export Controls,” September 2026.