The International Monetary Fund (IMF) has revised its global economic growth forecast for this year, slightly upgrading it to 3.1 per cent, up from the previous estimate of three per cent in July. However, the IMF warns of increasing risks associated with rising debt levels and the financial fervor surrounding artificial intelligence (AI).
According to the IMF’s latest Economic Outlook report unveiled during the fall meetings of the IMF and World Bank in Bangkok, the global economy is projected to expand by 3.4 per cent in 2027. The United States is anticipated to maintain a steady growth rate of 2.3 per cent in 2026 and 2027.
Advanced economies are expected to grow by 2.1 per cent this year, a rise from two per cent in 2025, but this growth is predicted to slow to 1.9 per cent next year. The IMF’s forecasts are based on an almost 41 per cent surge in oil prices, averaging $96 per barrel this year. Global inflation is estimated at 4.7 per cent in 2026, with a projected decrease to 4.1 per cent in the following year.
The report assumes that oil and gas shipments through the Strait of Hormuz will resume by March and that the demand spike in AI will moderate. The IMF points out that the proliferation of AI is offsetting the adverse effects of surging oil and gas prices, although the technology brings its own set of risks.
The uneven impacts of AI are highlighted, with the U.S. and China accounting for over three-quarters of net demand for AI-related equipment. IMF’s Director of Research, Silvana Tenreyro, emphasized the uneven nature of this outlook, mentioning that 32 countries contribute to 95 per cent of global growth, down from 54 countries in April.
Deputy Director at the IMF’s monetary and capital markets department, Athanasios Vamvakidis, raised concerns about potential risks associated with AI, such as stock market corrections and cyber threats disrupting financial systems. The impact of AI on employment is also a growing concern, with IMF Managing Director Kristalina Georgieva citing a potential 40 per cent impact on jobs globally.
Debt levels remain a key worry, with the IMF urging countries to enhance their national finances and curb escalating debt burdens, especially amidst high borrowing costs. Developing economies and emerging markets more susceptible to energy price shocks are projected to experience a slowdown in growth this year, with a rebound expected next year.
In the Middle East and Central Asia, economic contractions are anticipated this year, followed by a recovery to a 6.3 per cent growth rate in 2027. The IMF forecasts sluggish growth for the eurozone countries at 1.1 per cent this year and 1.2 per cent in 2027.
China’s economy is expected to grow by 4.5 per cent this year, while India is forecasted to be the fastest-growing major economy at a seven per cent pace. The IMF, as a global lending organization, focuses on fostering economic growth, financial stability, and poverty reduction across 191 nations.
The IMF and World Bank meetings in Bangkok serve as a platform for finance ministers and central bank governors to evaluate the global economic landscape and strategize ways to bolster financial stability and sustained growth.