The International Monetary Fund on Tuesday raised its projection for global economic expansion this year to 3.1%, up from the 3.0% rate it forecast in July. But the upgraded outlook came with warnings about mounting risks from increasing debt levels—including borrowing tied to artificial intelligence—and sharply higher energy costs. The report arrived as economic and financial leaders from around the world convened in Bangkok for the fall meetings of the IMF and World Bank.
The IMF expects the world economy to reach 3.4% growth in 2027, following this year's 3.1% pace, both figures falling short of the 3.5% expansion seen in 2025. Advanced economies collectively are projected to expand 2.1% in 2026, an improvement from 2.0% last year, before slowing to 1.9% in 2027. U.S. growth is anticipated to hold steady at 2.3% in both 2026 and 2027, according to the report. Developing economies and emerging markets face a sharper slowdown, with growth dropping to 3.7% this year from 4.5% in 2025, though the IMF predicts they'll regain momentum next year with 4.4% expansion. The Middle East and Central Asia face contraction this year before rebounding to 6.3% growth in 2027. China's economy is expected to expand 4.5% this year, down from 5% in 2025, while India remains the fastest-growing major economy at 7%, down from 7.7% last year. The 21 European nations using the euro are forecast to grow 1.1% this year and 1.2% in 2027. These projections assume oil prices will jump nearly 41% this year to average $96 per barrel, global inflation will reach 4.7% in 2026 before falling to 4.1% in 2027, and that oil and gas shipments through the Strait of Hormuz will resume by March.
The AI boom is helping offset damage from higher energy prices, but its benefits aren't evenly distributed. Silvana Tenreyro, the IMF's director of research, told reporters in Bangkok that "the outlook is highly uneven," with growth increasingly concentrated among just 32 countries that account for 95% of global expansion—down from 54 countries in April. The U.S. and China together represent more than three-quarters of net demand for imports of computer chips and other AI-related equipment. IMF Managing Director Kristalina Georgieva described AI's employment effects as "a slow moving tsunami, but a tsunami nonetheless," estimating the impact on roughly 40% of jobs globally, with positions either enhanced, downgraded, or eliminated.
The report's authors explain that growth is being redistributed across nations based on their exposure to war-induced supply shocks and AI-related demand strength, rather than simply accelerating or decelerating uniformly. Countries somewhat shielded from energy disruptions caused by conflict in Iran and those benefiting from rapid AI adoption are maintaining growth, while nations more vulnerable to higher oil and gas costs are seeing expansion slow. The concentration of AI's benefits in just two major economies means most countries are experiencing the costs of higher energy prices without the offsetting gains from technology investment, creating an increasingly uneven global landscape.
The IMF's warnings extend beyond uneven growth distribution to financial system risks tied to the AI surge. Athanasios Vamvakidis, deputy director at the IMF's Monetary and Capital Markets Department, identified an AI-related stock market correction as one danger, alongside rising bond yields and cyberthreats that could disrupt financial systems. Those concerns materialized Tuesday when sell-offs of AI-related shares swept through Asia, with South Korea's Kospi dropping 5.5%. Last week, IMF leadership urged both wealthy and poor nations to improve their fiscal positions and control mounting debt levels, particularly urgent given high borrowing costs. The fund's forecasts assume the AI demand boom will moderate, but if that assumption proves wrong, the debt and market risks could intensify further.