Image to help understand the article
AI spending lifts the global outlook
The International Monetary Fund raised its global economic growth forecast for this year by 0.1 percentage point to 3.1%, citing technology demand fueled by investment in artificial intelligence.
The latest projection is up from the IMF’s 3% estimate in July. The organization had forecast 3.3% growth in January before cutting its outlook to 3.1% in April following the outbreak of war with Iran and then to 3% in July. It left next year’s forecast unchanged at 3.4%.
The IMF said the global economy had again demonstrated resilience despite continuing conflict in the Middle East and trade tensions, with economic activity during the first half of 2026 exceeding expectations. Flexible supply responses, changes to shipping routes, inventory reductions and government support helped limit the impact of the war. The reduced energy intensity of modern economies compared with past decades also provided a buffer.
Growth remains uneven as risks mount
The recovery has not been shared equally. Technology exports, investment and favorable trading conditions supported some economies, while others faced higher import costs and weaker demand. Businesses have adapted to geopolitical risks and changing trade policies, the IMF said, but their room to make further adjustments is narrowing.
Risks remain tilted to the downside. The IMF pointed to the possibility of a prolonged Middle East stalemate, further escalation, disruptions to energy infrastructure, cyberattacks and extreme weather. A reassessment of AI’s potential profitability or productivity gains could also cause investment to retreat.
More favorable outcomes are possible if AI investment lasts longer than expected or productivity improves more quickly. New trade agreements could make the global economy more predictable and resilient, while higher fossil fuel prices could encourage investment in energy security.
U.S. outlook holds steady as South Korea gets a semiconductor boost
The IMF maintained its U.S. growth forecast at 2.3% for this year and raised next year’s estimate from 2.2% to 2.3%. The eurozone forecast increased from 0.9% to 1.1% for this year, reflecting a strong recovery in Ireland and continued momentum in Spain, while next year’s estimate remained at 1.2%.
South Korea received one of the report’s notable upgrades. The IMF now expects Asia’s fourth-largest economy to grow 3.3% this year and 2.8% next year, up from July forecasts of 2.6% and 2.5%, respectively. It attributed the increase to strong overseas demand for semiconductors, which outweighed the war’s negative effects. The chip sector is central to South Korea’s export-driven economy and supplies technology markets worldwide, including the United States.
Japan is projected to grow 0.7% this year and next. China’s forecast was lowered by 0.1 percentage point to 4.5% for this year. Emerging and developing economies are expected to slow to 3.7% this year before recovering to 4.4% next year, with both estimates down 0.1 percentage point from July.
Middle East rebound depends on restored trade routes
The IMF expects the Middle East and Central Asia to contract 0.3% this year before rebounding 6.3% next year. The estimates reflect a longer-than-expected closure of the Strait of Hormuz and the prospect of a stronger recovery after it reopens. Iraq, Kuwait and Qatar are forecast to move from double-digit contractions this year to double-digit growth next year as production, exports and logistics return to normal.
Global inflation is projected at 4.7% this year and 4.1% next year. Growth in world trade volume is expected to slow from 5% last year to 4.6% this year before stabilizing at 4.7% next year.
Comments
Post a Comment