As finance ministers gathered in Bangkok, the International Monetary Fund offered a forecast that is at once reassuring and unsettling: the world economy will grow, but the circle of nations sharing in that growth is quietly contracting. Artificial intelligence investment has become the unlikely ballast keeping global expansion afloat amid war and energy shocks, yet it also introduces a new fragility — one built on expectations that may yet prove larger than the reality they anticipate. The IMF's message is not crisis, but caution: resilience, when it rests on narrowing foundations, is a diffe
IMF: AI investment sustains global growth, but Middle East war and debt pose mounting risks
Resilience is under strain, with risks tilted to the downside
Mark
So the headline is that growth is holding up at over 3%, but you're saying the real story is about who's being left behind?
Mimi
Exactly. The 3.1% number masks a dramatic concentration. Ninety-five percent of growth is coming from just 32 countries now. In April it was 54. That's a huge shift in a few months.
Luke
But wait—is that 32 countries a fixed list, or is it the top 32 by contribution? Because those could be different things.
Mimi
It's the top 32 by contribution to global growth. So yes, it's about which economies are actually driving the expansion.
Mark
And the Middle East is getting crushed by this war?
Mimi
Devastated. Saudi Arabia went from expected growth of 1.7% to a 3.3% contraction. Iran, Iraq, Kuwait are all looking at double-digit contractions.
Luke
Those are big numbers. But how much of that is the war itself versus oil prices, versus other factors? The IMF is attributing it all to the conflict, but is that actually proven?
Mimi
The IMF's analysis is that the war is keeping oil prices elevated, which directly hurts energy importers and destabilizes the region. That's their causal chain.
Mark
What's keeping the global economy afloat then?
Mimi
Artificial intelligence investment. Companies and countries are pouring money into AI infrastructure, and that's offsetting the energy shock.
Luke
But the IMF also says AI is a huge risk. If that investment bubble bursts, the downside is severe.
Mimi
Right. If productivity gains don't materialize and investment collapses, global GDP could drop 1.1% by 2028. That's a real scenario they're modeling.
Mark
So we're in a situation where growth depends on AI staying hot, but AI might not deliver?
Mimi
That's the tension. And meanwhile, countries that aren't part of the AI value chain are falling further behind, and debt is piling up everywhere.
Luke
The debt warning is important. The IMF is saying governments need to act now, but is there any indication they actually will?
Mimi
That's what they're going to push at these meetings in Bangkok. But historically, governments delay on fiscal reform until they're forced to act.
Le Pouls
- Only 32 countries now drive 95% of global growth — down from 54 just months ago — revealing how quickly the benefits of the AI boom are concentrating among a shrinking group of nations.
- The Middle East war has pushed oil above $100 a barrel and shattered Gulf economies, with Saudi Arabia's 2026 growth forecast swinging from a 1.7% expansion to a 3.3% contraction.
- AI infrastructure spending is the single force holding the headline growth number together, but the IMF warns that if those productivity promises go unfulfilled, a sharp pullback could erase 1.1% of global GDP by 2028.
- Advanced economies are carrying debt loads that leave little room for error — the IMF is pressing governments in Bangkok to stop deferring fiscal reckoning before borrowing costs force the issue.
- The fund's baseline assumes the Strait of Hormuz reopens by March 2027; if conflict deepens and oil hits $130 a barrel instead, global inflation could surge to 5.2% and growth would fall further still.
As finance ministers gathered in Bangkok, the International Monetary Fund offered a forecast that is at once reassuring and unsettling: the world economy will grow, but the circle of nations sharing in that growth is quietly contracting. Artificial intelligence investment has become the unlikely ballast keeping global expansion afloat amid war and energy shocks, yet it also introduces a new fragility — one built on expectations that may yet prove larger than the reality they anticipate. The IMF's message is not crisis, but caution: resilience, when it rests on narrowing foundations, is a different thing from strength.
The International Monetary Fund arrived at its annual meetings in Bangkok on Tuesday with a forecast that holds together on the surface but shows deepening cracks beneath. Global growth is projected at 3.1% for 2026 — a slight upgrade from July — sustained largely by a surge in artificial intelligence infrastructure investment that has more than offset the drag from a prolonged Middle East war keeping oil prices above $100 a barrel. For 2027, the fund expects modest acceleration to 3.4%, though that would still fall short of 2025's pace.
The headline number, however, conceals a striking narrowing. Just 32 countries now account for 95% of global economic expansion, compared with 54 in April. Nearly half of all economies have seen their growth forecasts cut since spring. The divergence is sharpest in the Middle East, where war has devastated Gulf states: Saudi Arabia's outlook collapsed from a projected 1.7% gain to a 3.3% contraction, while Iran, Iraq, and others face even steeper declines. Meanwhile, nations embedded in the AI supply chain — South Korea, Malaysia, Thailand, Mexico — have received upgrades. The United States grows at 2.3%, the eurozone at 1.1%, and India leads major economies at 7.0%.
IMF chief economist Silvana Tenreyro was candid about the fragility of this picture. The fund's baseline assumes the Strait of Hormuz reopens by March 2027 and oil averages $96 a barrel this year. Should conflict escalate and prices spike to $130, global growth would fall an additional half-point in 2027 and inflation could reach 5.2%.
Artificial intelligence is simultaneously the economy's greatest support and its most consequential gamble. If adoption delivers on its promise, global GDP could gain an extra 0.6% by 2029. But if the investment boom has been built on inflated expectations, a pullback could cost the world 1.1% of output by 2028 — with the United States absorbing a 1.8% loss and Asian technology exporters feeling the reverberations. Woven through all of this is a third vulnerability the IMF pressed hard: advanced economies carry public debt levels that leave them dangerously exposed to rising borrowing costs. The fund urged governments to stop deferring fiscal discipline before the choice is made for them.
The International Monetary Fund released its latest economic forecast on Tuesday with a message of resilience shadowed by deepening fractures. The global economy will still cross the 3% growth threshold this year—the IMF projects 3.1% for 2026—but the picture underneath that headline number reveals an increasingly divided world, where artificial intelligence investment is propping up growth in a shrinking circle of nations while others fall further behind.
The forecast, unveiled as finance ministers and central bankers gathered in Bangkok for the IMF and World Bank annual meetings, reflects an economy holding its ground despite significant headwinds. A prolonged war in the Middle East has kept oil prices above $100 a barrel, yet strong spending on AI infrastructure has more than compensated for the energy shock. The 3.1% projection represents a modest upgrade from the 3.0% the IMF predicted just three months earlier in July. For 2027, the fund expects growth to accelerate slightly to 3.4%, though this remains below the 3.5% achieved in 2025.
The real story, however, lies in the distribution of that growth. Just 32 countries now account for 95% of global economic expansion, a dramatic narrowing from the 54 countries that held that share in April. The IMF has downgraded growth forecasts for 47% of all economies since spring, leaving many nations—particularly those dependent on energy imports and outside the artificial intelligence supply chain—increasingly vulnerable. The divergence is starkest in the Middle East, where the war has inflicted severe damage. Saudi Arabia's growth forecast collapsed from a projected 1.7% expansion to a 3.3% contraction. Iran, Iraq, Kuwait, Qatar, and the United Arab Emirates face even steeper declines, with contractions ranging from 3.9% to 16.7% for 2026.
The countries benefiting most from the AI boom are those building the infrastructure or supplying the hardware. South Korea, Malaysia, Mexico, and Thailand—the host nation for this week's meetings—have all received growth upgrades. Among the world's largest economies, the picture is mixed. The United States is expected to grow at 2.3% in both 2026 and 2027, supported by consumer spending, tax cuts, and AI investment, though the benefit is partially offset by the high import content of AI technology. The eurozone received an upgrade to 1.1% growth for 2026, up from 0.9% in July, thanks to stronger AI investment and participation in related supply chains like German chemical production. Britain's forecast also improved by 0.3 percentage points to 1.3%. China's growth is projected at 4.5% for 2026, down slightly from July, as higher oil prices weigh on an economy already struggling with weak domestic demand. India remains the world's fastest-growing major economy at 7.0% for both years, upgraded from earlier forecasts.
The IMF's chief economist, Silvana Tenreyro, acknowledged the precarious nature of this outlook. "The global economy has been resilient, but that resilience is under strain, with risks to growth tilted to the downside," she said. The fund's forecasts assume the Strait of Hormuz will reopen by March 2027 and that oil prices will average $96 per barrel this year and $87 next year. But the scenarios sketched in the report reveal how fragile these assumptions are. If the Middle East conflict worsens and oil prices spike to $130 per barrel through the first quarter of 2027, global growth would fall by 0.5 percentage points in 2027 alone, and inflation would surge to 5.2%.
Artificial intelligence itself presents both the greatest opportunity and the greatest risk. If adoption accelerates and investment continues to surge, global GDP could rise an additional 0.6% by 2029, with most gains flowing to the United States and China. But if the productivity gains fail to materialize—if the investment boom proves to have been built on inflated expectations—the consequences would be severe. A sharp pullback in AI spending could reduce US GDP by 0.8% directly, with spillovers to Asian technology exporters adding another 0.4% to the global contraction by 2028. Combined with the financial tightening that would follow, the total global output loss could reach 1.1% by 2028, including a 1.8% drop in American output.
Underlying all these scenarios is a third risk that the IMF emphasized repeatedly: debt. Advanced economies carry elevated public debt loads that leave them vulnerable to sharp increases in borrowing costs. The fund urged governments to stop postponing difficult fiscal decisions and to develop credible plans to bring debt back to sustainable levels—a message IMF officials plan to press hard during the Bangkok meetings. The global economy has proven more durable than many feared when the Middle East conflict erupted, but the foundation beneath that durability is narrowing, and the costs of misstep are rising.
Citations marquantes
The global economy has been resilient, but that resilience is under strain, with risks to growth tilted to the downside.— Silvana Tenreyro, IMF chief economist
Global growth would have fallen to 2.5% this year without measures to mitigate the oil price shock, but their effect is fading as the war drags on.— Petya Koeva Brooks, IMF deputy research director
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Economy & Finance