The International Monetary Fund (IMF) upgraded its global economic outlook for this year, now expecting a 3.1% growth rate, slightly higher than the previous forecast of 3%. However, the IMF warns of increasing risks due to growing debt levels and the impact of artificial intelligence (AI) on financial markets.
During the fall meetings of the IMF and World Bank in Bangkok, the IMF released its latest Economic Outlook, projecting a 3.4% global economic growth in 2027 after a 3.5% expansion in 2025. The report anticipates the United States to maintain a steady growth rate of 2.3% in 2026 and 2027.
Advanced economies are forecasted to grow by 2.1% this year, up from 2% in 2025, but the growth is expected to slow down to 1.9% next year. The IMF’s predictions consider a 41% increase in oil prices, with an average of $96 per barrel in 2026. Global inflation is projected to reach 4.7% this year, decreasing to 4.1% in the following year.
The IMF’s outlook also factors in the assumption that the shipment of oil and gas through the Strait of Hormuz will resume by March, and the surge in AI demand will moderate. While AI is offsetting the impact of high energy prices, it poses risks due to uneven distribution of benefits, with the U.S. and China driving the majority of demand for AI-related technology.
IMF officials highlighted concerns about AI-related market corrections, rising bond yields, and cyberthreats that could disrupt financial systems. The effects of AI on employment are also a significant worry, with an estimated global job impact of around 40%.
IMF Managing Director Kristalina Georgieva emphasized the importance of countries improving their national finances and managing escalating debt levels, especially given the current high borrowing costs. Developing economies and emerging markets vulnerable to energy price spikes are expected to experience a slowdown in growth this year, with a rebound forecasted for next year.
The IMF projects a contraction in the economies of the Middle East and Central Asia this year, with a recovery to a 6.3% growth rate in 2027. Eurozone countries are expected to see modest growth rates, with the euro area expanding by 1.1% this year and 1.2% in 2027.
China is anticipated to grow by 4.5% this year, down from five per cent in 2025, aligning with the government’s target. Meanwhile, India is projected to maintain its status as the fastest-growing major economy, with a growth rate of seven per cent.
The IMF, a global lending organization, aims to promote economic growth, financial stability, and poverty reduction across 191 member nations. The recent meetings in Bangkok saw finance ministers and central bank governors discussing strategies to bolster financial stability and sustainable growth worldwide.