The global economy is showing an unusual form of resilience: growth is holding up even as war-driven energy costs, trade tensions and financial risks intensify. The International Monetary Fund projects global output will expand 3.1% in 2026 and 3.4% in 2027, but the headline figures conceal an increasingly divided recovery. An artificial-intelligence investment boom is supporting demand in some economies, while higher energy and food prices are weakening others.

The IMF’s October World Economic Outlook forecasts global inflation will rise to 4.7% this year before easing to 4.1% in 2027. Growth in advanced economies is expected to reach 2.1% in 2026, compared with 3.7% for emerging and developing economies. China is projected to grow 4.5%, according to a summary of the report published by The Daily Star.

Two shocks, moving in opposite directions

IMF officials describe the outlook as the product of two opposing forces. Conflict in the Middle East has created what the fund calls a negative energy supply shock: higher prices raise production and transport costs, squeeze households and force central banks to keep inflation in view. At the same time, spending on data centers, chips, software and related infrastructure is acting as a positive demand shock.

“The current steady aggregate growth reflects two opposing forces: an energy shock hurting growth and an AI boom lifting it,” the IMF said in its assessment of the annual meetings.

The distinction matters because an investment boom can lift output without spreading prosperity evenly. Countries hosting technology firms, semiconductor production or large data-center projects benefit from capital inflows and construction. Economies tied to the AI supply chain, including the United States, China, India and other Asian markets, have received relatively favorable revisions, the IMF reported. Energy-importing and lower-income countries face the opposite combination: more expensive imports, weaker purchasing power and less fiscal room to respond.

Why the good news may be fragile

The AI boom is not simply a technology story; it has become a macroeconomic support. Investment in computing capacity and related infrastructure is strengthening trade and demand even as geopolitical disruption weighs on activity. That helps explain why the IMF raised its 2026 growth forecast from its July projection of 3%, as CNBC reported.

But the same concentration that makes AI powerful also makes it vulnerable. The IMF warns that AI supply chains are concentrated in a small number of countries, sectors and firms, creating potential chokepoints. A reassessment of expected profits could therefore affect not only technology shares but also investment, trade and business confidence. The fund identifies a market correction following overly optimistic AI expectations as a major downside risk.

That concern does not mean the technology’s productivity potential is illusory. Faster adoption could raise output and improve living standards, particularly if businesses translate large capital spending into efficiency gains. The risk is timing: financial markets and corporate investment may be pricing in benefits before those benefits are broadly visible in wages, productivity and public revenues.

The policy dilemma

Governments face competing pressures. Supporting households against energy and food inflation can protect demand, but broad subsidies are expensive and may delay adjustment. Tight monetary policy can contain second-round inflation, yet it also raises borrowing costs for governments and companies. The IMF has warned that sovereign bond yields in advanced economies have reached multi-decade highs amid persistent inflation, fiscal concerns and expectations of stronger future growth linked to AI.

For poorer countries, the choices are narrower. Higher import bills can worsen current-account balances, while elevated global interest rates make refinancing debt more difficult. The IMF’s policy analysis calls for rebuilding fiscal buffers, preserving price stability and avoiding measures that protect narrow interests at the expense of longer-term resilience.

There is also a distributional question within countries. AI-related investment may create high-value jobs and tax revenue, but its gains can remain concentrated among capital owners and specialized workers. Energy inflation, by contrast, is broadly felt. Without investment in skills, competition and social protection, the political backlash against both globalization and automation could intensify.

What comes next

The near-term outlook will depend on whether the energy shock fades faster than AI investment slows. A prolonged or wider Middle East conflict would keep inflation elevated and deepen the divide between producers, technology exporters and import-dependent economies. Renewed trade tensions could add another supply shock. A disorderly correction in AI markets would strike the very investment cycle currently supporting global growth.

The more favorable path is possible but demanding: energy prices stabilize, AI investment produces measurable productivity gains, and governments use the breathing room to strengthen public finances rather than assume rapid growth will continue. The IMF’s central forecast is not a prediction of crisis, but neither is it a declaration of safety. It describes an economy balanced between a war-induced drag and a technology-led lift—resilient for now, but increasingly dependent on forces policymakers do not fully control.

Sources: IMF World Economic Outlook; IMF press briefing; CNBC; The Daily Star.