The global economy is proving more resilient than many forecasters expected, but the International Monetary Fund’s latest outlook offers little grounds for complacency. Growth is projected at 3.1% in 2026, rising to 3.4% in 2027, while global inflation is expected to reach 4.7% this year before easing to 4.1% next year. The headline numbers conceal an increasingly uneven expansion shaped by two opposing forces: an artificial-intelligence investment boom and a war-driven energy shock.

The IMF raised its 2026 growth forecast by 0.1 percentage points from July, but the upgrade still represents a slowdown from 3.5% growth in 2025. The improvement reflects stronger-than-expected activity in the first half of the year, supported by technology investment, fiscal assistance and continued demand in several advanced economies. Yet the institution warns that resilience may be approaching its limits.

AI has become a macroeconomic force

Artificial intelligence is no longer merely a technology-sector story. Demand for chips, data centres, electricity, networking equipment and software is now helping drive trade and investment across economies connected to the sector. The IMF describes AI-related investment as a positive demand shock that has helped offset the drag from conflict and higher commodity prices.

That support is powerful but concentrated. Countries and companies positioned inside AI supply chains are capturing much of the investment, while economies dependent on imported energy or traditional manufacturing receive fewer benefits. The IMF says technology-related investment is concentrating risks among a small number of firms, sectors and countries.

“Risks surrounding AI are two-sided,” IMF research official Deniz Igan said in the institution’s outlook briefing, pointing to both faster-than-expected productivity gains and the possibility that overly optimistic expectations trigger a market correction.

The central uncertainty is whether current spending will translate into broad productivity gains. Optimists see AI reducing costs, raising output and generating a new investment cycle. Skeptics point to high valuations, heavy dependence on a limited group of firms and the danger that projected revenues fail to justify the infrastructure being built. A sharp reassessment could weaken equity markets, corporate investment and consumer confidence simultaneously.

War turns energy into a global transmission channel

The other force is less promising. The IMF’s projections assume a roughly 41% increase in oil prices in 2026, to an average of about $96 a barrel, and the resumption of oil and gas shipments through the Strait of Hormuz by March. Those assumptions reveal how sensitive the forecast is to events outside economic policymakers’ control.

Higher energy prices function as a supply shock: they raise transport, manufacturing and food costs while reducing household purchasing power. Energy-importing countries face the most direct pressure, particularly lower-income economies with limited fiscal room to subsidize consumers or protect essential services. The IMF expects the Middle East and Central Asia region, directly exposed to the conflict, to contract by 0.3% in 2026.

Advanced economies are better positioned to absorb the shock, though not immune. Their collective growth is forecast at 2.1% this year, before slowing to 1.9% in 2027. Governments may cushion households, but such measures add to debt at a time when borrowing costs and interest payments are already constraining budgets.

The unequal recovery is the political risk

The division between AI-linked winners and energy-exposed losers could become as consequential as the growth rate itself. Countries that benefit from chip production, data infrastructure or favorable terms of trade may attract capital and skilled workers. Others may face higher import bills, weaker currencies and reduced capacity to finance education, health care and climate adaptation.

This split complicates the policy response. Tight monetary policy can help contain inflation but may further weaken investment and raise debt-servicing costs. Fiscal support can protect households and strategic industries, yet poorly targeted subsidies risk worsening public finances. Trade restrictions intended to secure technology supply chains may also increase costs and deepen economic fragmentation.

The IMF is therefore calling for policies that preserve financial stability, rebuild fiscal buffers and broaden the gains from technological change. That means more than encouraging private AI investment. It requires training workers, expanding reliable electricity and digital infrastructure, and ensuring that smaller and poorer economies can access productive technologies rather than remaining consumers of imported systems.

What comes next

In the near term, markets will watch three variables: energy flows, the durability of AI spending and the path of inflation. A prolonged disruption in the Middle East could invalidate the IMF’s baseline and force central banks to choose between supporting growth and restraining prices. Conversely, evidence that AI is delivering measurable productivity improvements could make the 2027 rebound stronger than forecast.

The more immediate danger is complacency. A respectable global growth figure can mask fragile finances, concentrated investment and widening disparities. The current expansion is being carried by an unusual combination of technological optimism and emergency economic adaptation to war. Whether it becomes a durable recovery will depend on converting the benefits of AI into broad productivity gains while preventing energy shocks and financial excess from overwhelming already-stretched governments.

Sources: IMF World Economic Outlook, October 2026; IMF Annual Meetings briefing; Associated Press report on the IMF forecast.