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The upgrade masks an increasingly uneven expansion. Spending on chips, data centers and power is supporting demand before broad productivity gains arrive.
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The IMF’s outlook points to an uneven AI-supported expansion: investment in chips, data centers and power is sustaining activity before broad productivity gains have appeared. That makes the near-term lift dependent on continued spending, while adding to inflation and leaving growth exposed to energy disruption or a reassessment of AI returns. For AI-market watchers, the forecast is evidence of AI’s growing macroeconomic footprint, but not yet proof that the buildout is delivering economy-wide efficiency gains.
The IMF expects global growth of 3.1% in 2026, slowing from 3.5% in 2025; its 2027 forecast remains 3.4%.
Thirty-two economies now account for 95% of global growth, compared with 54 economies in April, reflecting a more concentrated expansion.
Global inflation is forecast at 4.7% in 2026 and 4.1% in 2027, up from the IMF’s previous 3.9% estimate for 2027.
The International Monetary Fund raised its 2026 global growth forecast to 3.1% from 3.0%, crediting AI investment with helping the economy withstand higher energy costs and war. Its outlook, released at the annual meetings in Bangkok and covered by CNBC, carries a warning: the spending supporting demand now is also adding inflation and financial risks.
The revision is an improvement on July’s estimate, not a return to faster expansion. Growth is still expected to slow from 3.5% in 2025. The IMF left its 2027 forecast unchanged at 3.4%, while warning that the cushions helping economies absorb disruption are narrowing.
AI-related investment helped economic activity in the first half of 2026 hold up better than expected, the IMF said. Spending provided an immediate lift to demand despite the Middle East war and trade tensions. Fiscal support also helped underpin the stronger-than-expected performance.
The fund describes the AI buildout as a large, front-loaded demand shock: money is pouring into semiconductors, data centers and power generation before broad productivity gains have materialized. The near-term contribution is therefore the investment itself, rather than a demonstrated economy-wide improvement in how efficiently work gets done.
That sequencing creates a tradeoff. The IMF says AI spending is also adding inflationary pressure. It maintained its global inflation forecast at 4.7% for 2026 and raised the 2027 estimate to 4.1% from July’s 3.9%. Price growth is expected to ease, but less than previously projected.
The stronger headline forecast conceals a more concentrated expansion. Thirty-two economies now account for 95% of global growth, down from 54 in April. Countries serving AI-related demand and facing limited exposure to the war’s supply disruption are holding up or strengthening, according to the fund.
Energy importers outside the technology supply chain face higher import bills, weaker real incomes and less room for government spending. The euro zone is forecast to grow just 1.1% this year amid higher energy costs and weak consumer confidence. The Middle East and Central Asia is projected to contract 0.3%.
The outlook assumes the Strait of Hormuz will reopen in March 2027, with conditions returning to their pre-war state by October. Those are IMF projections. Meanwhile, economies have diversified fuel sources and tapped strategic reserves to contain the energy-market turmoil, but those buffers cannot absorb disruption indefinitely.
Global oil reserves are being drawn down by about 2.7 million barrels a day, nearing levels that could trigger sharp price moves, the IMF said. It warned that energy constraints could impair the AI-led momentum—the same investment activity that has helped offset the war’s economic damage.
There is also a risk that investors reassess AI’s profitability and productivity prospects. In the IMF’s downside scenario, where productivity gains fail to materialize, U.S. equities could fall 20%. That is a modeled risk, not its baseline forecast; weaker expectations could also cause excessive investment to pull back.
The fund’s policy advice remains cautious despite the growth upgrade. Research director Silvana Tenreyro urged sufficiently restrictive monetary policy to bring inflation back to target. The IMF also called for governments to rebuild fiscal room and keep assistance for households facing higher food and energy costs temporary and targeted.
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A retreat in AI investment could reduce global economic output by 0.4% by 2028, the International Monetary Fund projected in a report released this week. At the IMF–World Bank Annual Meetings in Bangkok, officials warned that the spending helping sustain growth could also become a source of financial instability if confidence breaks.
The warning followed an assessment of AI-related demand’s contribution so far. In a report published Tuesday, the IMF said spending on data centers and microchips had helped cushion the shock of rising global energy prices caused by war in the Middle East. The report pointed to AI’s physical buildout—not just expectations about the technology—as a source of support.
The trade figures show the scale of that contribution. IMF chief economist Silvana Tenreyro said global trade rose 8.3% between 2023 and 2025. Without AI-related products, she estimated, the increase would have been closer to 4.6%. That comparison concerns growth in trade over the period, rather than AI’s share of total trade or its contribution to global GDP.
By Friday, Bank of Canada Governor Tiff Macklem was describing an economic presence that extended across several markets. “You see it in GDP. You see it in the stock market. You see it in the bond market,” he said. His remarks captured why officials were discussing AI as an economy-wide issue rather than a development confined to technology companies.
The IMF’s downside warning hinges on investment and profitability. Its report said weaker or shorter-lived AI investment and profits could trigger a market correction. The 2028 projection is a conditional risk estimate, not a forecast that global output will fall by that amount; it describes a potential cost if investment declines, not a loss already recorded.
IMF chief Kristalina Georgieva told AFP that a slowdown in the industry “would be felt across the world.” Her concern went beyond reduced spending on new infrastructure: she warned that investors losing confidence and withdrawing money could create risks to financial stability.
If there is loss of confidence and money runs away from AI, that can lead to financial stability risks
One potential source of pressure is the same conflict whose economic effects AI spending has helped soften. Moody’s Analytics economists warned that a prolonged Middle East war could “puncture” the boom. Higher energy prices and tighter financial conditions could raise operating costs and interest rates, adding to doubts about the long-term profitability and viability of AI business models.
Federal Reserve Chair Kevin Warsh paired enthusiasm with uncertainty about how the industry will develop. He called AI the most consequential change to the global economy in his lifetime and said it offered “a huge benefit.” But he warned of a bumpy transition, citing both incomplete understanding of the technology and uncertainty about the market structure around it.
Policy remains another point of disagreement. US President Donald Trump has urged more limited government regulation, while some in the industry have called for legislation to reduce risks. Georgieva argued in Bangkok on Friday that protections were part of the balance between AI’s promise and its dangers: “If there are no safeguards, then the risks may exceed the opportunities.”
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