IMF raises its forecast for world growth this year but warns of risks from AI boom and debt
BANGKOK (AP) — The International Monetary Fund on Tuesday slightly upgraded its outlook for the world economy for this year, while warning of growing risks from rising debt, including the financial frenzy around artificial intelligence.
The IMF says it expects the global economy to grow at a 3.1% pace this year. That's up from its July forecast for 3.0% growth and well below the 3.5% expansion in 2025. Growth in 2027 should rebound to 3.4%, it said in its latest Economic Outlook.
The report, released as world economic and financial leaders gathered in Bangkok for the fall meetings of the IMF and World Bank, predicts that growth in the United States will remain steady at 2.3% in 2026 and 2027.
Collectively, advanced economies will grow 2.1% this year, up from 2.0% in 2025, and then slow to 1.9% growth next year, it said.
The forecasts are based on a nearly 41% increase in oil prices this year, at an average of $96 a barrel. Global inflation is foreseen at 4.7% in 2026, falling to 4.1% next year. They also are based on the assumption that shipments of oil and gas through the Strait of Hormuz will resume by March, and that the boom in AI demand will moderate.
The boom in artificial intelligence is offsetting damage from sharply higher prices for oil and gas, IMF economists say, but it also carries risks.
Its benefits are not shared equally: the U.S. and China account for more than three-quarters of net demand for imports of computer chips and other AI-related equipment, the report said.
“The outlook is highly uneven,” Silvana Tenreyro, the IMF's director of research, told reporters in Bangkok.
Growth is increasingly concentrated, with 32 countries accounting for 95% of global growth, the report said. That compares with 54 countries as of April.
“The global economy is not simply slowing or accelerating; rather, growth is being reallocated across countries according to their exposure to the war-induced supply shock and AI-related demand strength,” it says.
Athanasios Vamvakidis, deputy director at the IMF's Monetary and Capital Markets Department, said an AI-related correction in stock markets is just one of the risks. Rising bond yields are another evolving problem, along with cyberthreats that could disrupt financial systems, he said.
Underscoring such concerns, sell-offs of AI-related shares swept through Asia on Tuesday, with South Korea's Kospi sinking as much as 7% before it closed 5.5% lower.
AI's effects on employment are another worry, “a slow moving tsunami, but a tsunami nonetheless,” IMF Managing Director Kristalina Georgieva said.
“The impact over time on jobs globally we estimate to be around 40% — jobs either augmented or downgraded or eliminated. And we are already seeing some of this impact,” she said.
The IMF chief is urging countries to do a better job of improving their national finances and taming mounting levels of debt.
That's especially crucial at a time of high borrowing costs, Tenreyro said.
Countries that are somewhat insulated from the energy shocks of the Iran war and that are benefiting from rapid adoption of AI are managing to keep growth on track. But developing economies and emerging markets more vulnerable to higher costs for oil and gas will see growth slow to 3.7% this year from 4.5% in 2025, the report says. It forecasts they will regain momentum next year, expanding at a 4.4% annual pace.
The situation is much worse in the Middle East and Central Asia, where those regions' economies are expected to contract this year before recovering to a 6.3% rate of growth in 2027.
The 21 European countries that share the euro currency are expected to grow by a meager 1.1% this year and 1.2% in 2027.
China, the world’s No. 2 economy, is expected to expand 4.5% this year, down from 5% in 2025, in line with the government's official target.
India is once again forecast to be the world’s fastest-growing major economy, advancing at a 7% clip, down from a sizzling 7.7% last year.
The IMF is a 191-nation lending organization that works to promote economic growth and financial stability and to reduce global poverty. At the meetings in Bangkok, finance ministers and central bank governors will assess the state of the world economy and discuss strategies to support financial stability and sustained growth.
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Associated Press journalists Haruka Nuga and Tian Macleod Ji contributed.
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