The global economy is proving more durable than many forecasters expected, but its resilience is increasingly uneven. The International Monetary Fund projects worldwide growth of 3.1% in 2026 and 3.4% in 2027, while warning that inflation will rise to 4.7% this year before easing to 4.1% next year. The headline figures conceal a sharper divide: an energy shock linked to war is weakening importers, while artificial-intelligence investment is supporting technology-intensive economies.

The result is not a single global cycle but two forces moving in opposite directions. Higher energy and food prices are reviving inflation and squeezing household purchasing power. At the same time, demand for computing infrastructure, advanced chips and data-centre capacity is creating a powerful investment upswing. Whether that combination produces a soft landing or a new period of instability will depend on how long the conflict-related shock lasts and whether the productivity gains promised by AI materialize.

War changes the inflation equation

The IMF says the decline in global inflation that began in early 2024 has stalled. Its October outlook attributes much of the renewed pressure to higher energy and food prices, with tensions in the Middle East identified as a risk that could keep costs elevated. For energy-importing countries, the shock operates like a tax: consumers pay more for transport, heating and basic goods, while businesses face higher operating costs.

Central banks therefore face a difficult trade-off. Cutting interest rates could support demand and relieve debt-service burdens, but doing so while energy prices are rising may prolong inflation. Keeping rates high can restrain prices, yet it also threatens investment, housing and heavily indebted governments. The IMF has warned that yields in advanced economies have reached multi-decade highs, reflecting persistent inflation, fiscal concerns and expectations of stronger growth from AI.

“This resilience is reaching its limits,” IMF Managing Director Kristalina Georgieva said in remarks summarized by the fund.

That warning matters especially for lower-income economies. Many have less fiscal room to subsidize fuel or food and are more exposed to currency depreciation when global interest rates rise. Higher borrowing costs increase debt-service payments just as import bills climb, leaving governments with fewer resources for development and social protection.

AI is cushioning growth—but concentrating gains

AI investment is the counterweight to the energy shock. Spending on chips, cloud computing, networking equipment and data centres is supporting output in countries integrated into the technology supply chain. The IMF describes this as a positive demand shock, with the possibility of faster productivity growth if businesses successfully deploy the technology.

That prospect has encouraged investors and helped sustain capital expenditure even as other sectors weaken. But the benefits are concentrated. Economies that design advanced chips, provide cloud services or supply specialized equipment are better positioned than countries that primarily import technology. The same pattern may emerge within countries, where highly skilled workers and large firms capture gains faster than routine occupations and smaller businesses.

The boom also carries financial risks. The IMF has identified a reassessment of AI expectations as a downside scenario: if projected profits fail to justify current investment and valuations, a correction could reduce business spending and weaken confidence. A more optimistic outcome is also possible. If AI raises productivity sooner than expected, it could lift growth, improve corporate margins and help offset some of the costs created by ageing populations and weak investment.

What comes next

The immediate test is whether energy disruptions fade. The IMF’s forecasts assume that the war shock becomes less severe, allowing inflation to decline in 2027 and growth to strengthen. An escalation would reverse that path by pushing up energy prices, worsening trade balances and forcing central banks to choose between supporting activity and defending price stability.

Policy makers also face a distributional challenge. Broad subsidies can shield consumers temporarily but strain public finances and discourage conservation. More targeted assistance can protect vulnerable households at lower cost, though it is harder to administer. Governments must also avoid treating AI investment as a substitute for competition policy, worker retraining and basic infrastructure.

The central message is that resilience is not the same as security. A 3.1% global growth rate suggests the world economy is avoiding a broad contraction, but it says little about who benefits. Energy importers, indebted states and households with limited savings may experience stagnation even while technology hubs expand. The next phase will be shaped by whether governments can contain the war’s inflationary effects, spread the gains from AI and preserve fiscal buffers before the next shock arrives.

Sources: IMF, World Economic Outlook, October 2026; IMF, Global Economic Resilience Is Under Strain; IMF, Annual Meetings 2026 briefing.