The global economy is proving harder to derail than many expected. In its October World Economic Outlook, the International Monetary Fund raised its 2026 growth forecast to 3.1%, from 3% in July, while projecting a rebound to 3.4% in 2027. Yet the headline resilience conceals a widening divide between countries benefiting from artificial-intelligence investment or favorable commodity conditions and those absorbing higher energy costs with little room for policy response.

The IMF expects global inflation to rise to 4.7% in 2026 before easing to 4.1% next year. That combination—continued expansion alongside renewed price pressure—captures the central tension confronting policymakers: the world economy has not entered a synchronized downturn, but neither has it returned to a stable, broadly shared recovery.

Two shocks moving in opposite directions

The immediate pressure comes from war-related energy disruption. The IMF describes higher energy and commodity prices as a negative global supply shock: they raise production and transport costs while reducing household purchasing power. Energy-importing countries are especially exposed, because more national income must be spent on fuel rather than investment, public services or consumer goods.

At the same time, the technology boom is acting as a positive demand shock. Investment in data centers, semiconductors, computing equipment and related infrastructure is supporting trade and industrial production. The IMF says the AI-led expansion is lifting both activity and prices, with particularly strong benefits for economies embedded in the technology supply chain.

That does not mean AI is offsetting the war evenly. Advanced economies are projected to grow 2.1% in 2026, compared with 2% in 2025, before slowing to 1.9% in 2027, according to figures reported by The Associated Press. The stronger performance partly reflects greater access to capital, diversified energy supplies and the ability to support demand through fiscal and monetary policy.

A split that runs through emerging markets

The more consequential divide is among developing economies. Countries producing energy or exporting technology can gain from higher prices and stronger investment. Import-dependent economies, by contrast, face rising bills, weaker currencies and pressure to raise interest rates even as domestic growth slows.

The IMF’s regional assessment points to the scale of that asymmetry: the Middle East and Central Asia region, directly exposed to the conflict and energy disruption, is expected to contract by 0.3% in 2026. The fund also warns that economies outside the AI supply chain may confront weaker demand at the same time that their import costs increase.

China illustrates another complication. The IMF reportedly lowered its 2026 growth forecast for China to 4.5%, while raising its estimate for Taiwan to 10.7%, reflecting the uneven distribution of semiconductor and AI-related gains, according to United Press International. Such figures should not be read as proof that one economy is broadly healthy and another broadly weak; they show how concentrated the current investment cycle has become.

Why the outlook remains fragile

The optimistic interpretation is that resilience can become self-reinforcing. If AI investment produces genuine productivity gains, companies may expand capacity, wages and hiring beyond the technology sector. Lower inflation in 2027 could then give central banks more room to reduce borrowing costs, supporting housing, business investment and consumption.

The more cautious view is that today’s boom may depend too heavily on expectations. A sharp reassessment of AI companies’ future earnings could weaken equity markets and cut investment before productivity benefits become visible. The IMF lists a recalibration of AI expectations, renewed trade tensions, higher sovereign borrowing costs and fiscal weakness among the main downside risks.

“The global economy is again proving resilient, but unevenly so and with rapidly narrowing margins of adjustment in the near term,” the IMF said in its October outlook.

Energy remains the most immediate variable. The IMF’s projections assume that the Strait of Hormuz will begin reopening gradually in March 2027 and return to prewar conditions by October, a significant condition rather than a minor technical assumption. A prolonged closure or further escalation would keep prices elevated, intensify inflation and force central banks to choose between supporting growth and defending price stability.

What comes next

Governments face a narrow policy path. Wealthier states can cushion households and firms, but broad subsidies risk worsening fiscal pressures and prolonging demand-driven inflation. Lower-income countries need targeted assistance, debt relief and reliable access to energy rather than policies that simply transfer scarce public funds across the economy.

The next phase will test whether AI can generate economy-wide productivity or mainly enrich a limited group of firms and countries. It will also test whether geopolitical shocks remain containable. The IMF’s forecast is therefore less a declaration of safety than a warning about unequal resilience: global growth may continue, but the costs of maintaining it are increasingly being distributed according to access to technology, energy and financing.

Sources: International Monetary Fund; IMF press briefing; Associated Press; United Press International.