The world economy is facing a test that is less dramatic than a global recession but potentially more consequential: can artificial-intelligence investment offset a renewed energy shock without deepening inflation, inequality and financial fragility?
Recent forecasts offer a cautiously resilient answer. The OECD projects global growth of 2.9% in 2026 and 3.0% in 2027, while the IMF’s July outlook puts growth at 3.0% and 3.4% respectively. Yet the United Nations has a considerably darker view, forecasting 2.6% growth in 2026 and 2.9% in 2027. The divergence reflects not only different assumptions about the Middle East conflict, but also uncertainty over how much of the technology boom represents durable productivity rather than concentrated corporate spending.
Two shocks, moving in opposite directions
The immediate drag is geopolitical. The UN says the Middle East conflict has constrained energy supplies, raised freight and insurance costs, and disrupted fertilizer markets. Brent crude has risen by roughly 40% since February to around $100 a barrel, according to the UN’s September update. The Strait of Hormuz, through which about one-fifth of global oil and liquefied-natural-gas supplies pass, has become a critical vulnerability.
Higher energy prices work through the economy quickly. Transport becomes more expensive, manufacturers face higher input costs and households lose purchasing power. The UN expects inflation in developed economies to rise from 2.6% in 2025 to 2.9% in 2026, while inflation in developing economies is projected to increase from 4.2% to 5.2%.
At the same time, AI-related investment is creating a powerful countercurrent. The IMF says accelerated technology adoption is offsetting part of the war’s impact, particularly in North America and Asia. The European Central Bank reports that stronger AI-exporting economies, including Malaysia, South Korea and Taiwan, helped sustain global activity in the second quarter even as the United States and China weakened.
Why the resilience may be misleading
AI spending is supporting demand through data centers, semiconductors, power equipment and specialized services. It is also strengthening the export position of economies embedded in the technology supply chain. That helps explain why financial markets and global output have so far absorbed the energy shock better than many expected.
But investment is not the same as broad-based prosperity. The benefits are concentrated among companies with access to capital, advanced infrastructure and scarce technical skills. Economies outside the AI supply chain may face higher fuel and borrowing costs without receiving comparable gains. The ECB’s relatively optimistic projection for euro-area growth—1.2% in both 2026 and 2027—still implies a slow expansion rather than a technology-led boom.
There is also a valuation risk. If expected AI productivity gains arrive later than investors anticipate, companies may reduce capital expenditure precisely when energy costs are weakening consumers. That would expose the economy’s apparent resilience as dependence on a narrow investment cycle.
The policy dilemma
Central banks face an uncomfortable choice. Cutting interest rates could support demand and public investment, but may prolong energy-driven inflation. Keeping rates high could contain price expectations while worsening debt-service burdens, especially for emerging markets that borrow in dollars.
Governments are under pressure to shield households from fuel and food prices. Such measures can prevent an immediate cost-of-living crisis, but broad subsidies are expensive and often benefit wealthier consumers who use more energy. The OECD says discretionary government support and alternative energy supplies have helped cushion the conflict’s effects; the longer the shock lasts, however, the harder that support will be to sustain.
The stronger long-term response would combine targeted income assistance with investment in energy efficiency, domestic power generation and resilient supply chains. That approach is slower than subsidies but reduces exposure to the next disruption.
What comes next
The central variable is whether the energy shock widens. A rapid de-escalation would allow AI investment and resilient labor markets to support a gradual recovery. A prolonged disruption would push inflation higher, squeeze poorer countries and force central banks to choose between price stability and growth.
The forecasts therefore tell a nuanced story. The global economy is not collapsing, but neither is it returning to the pre-pandemic growth path. The UN places potential growth well below the pre-pandemic average of 3.2%, while the OECD warns that weather-related supply shocks, including a strong El Niño, could add further food-price pressure.
AI may be the economy’s newest shock absorber, but it is not a substitute for energy security, fiscal capacity or inclusive productivity. The next phase will reveal whether the technology boom can spread beyond its leading firms and export hubs—or merely make an unstable world look temporarily stronger than it is.