AI investment propping up global growth: IMF

The International Monetary Fund (IMF) has released its World Economic Outlook forecast, predicting global GDP growth will still reach 3% in 2026 despite the ongoing conflict in the Middle East driving up oil prices above $100 per barrel. The IMF expects 3.1% global growth for 2026, up slightly from the 3.0% forecast in July, while the 2027 growth projection remains flat at 3.4%.

The improved outlook is attributed to strong investment in artificial intelligence (AI) infrastructure, specifically benefiting advanced economies constructing AI platforms and countries supplying AI hardware. This AI boom has prompted growth upgrades for nations such as South Korea, Malaysia, Mexico, and Thailand, which are hosting the annual IMF and World Bank meetings in Bangkok.

However, the IMF warns that downside risks are growing, with potential threats to growth stemming from a prolonged conflict, worsening fiscal prospects, reassessments of AI profitability, and extreme weather events. The organization notes that a prolonged Middle East conflict could further increase inflation pressures and impede growth.

The IMF also highlights a widening economic gap, with only 32 countries accounting for 95% of global growth, up from 54 countries in April. Growth revisions have become more widespread, with the IMF downgrading 47% of economies since April, including several oil-importing nations indirectly affected by the conflict.

Among major economies, the US is projected to maintain steady growth of 2.3% for both 2026 and 2027, supported by robust private consumption, tax cuts, and AI investment. Meanwhile, the Eurozone growth forecast has been upgraded to 1.1% for 2026, up from 0.9% in July, due to enhanced investment in AI, participation in AI value chains, and increased defense spending. Britain's 2026 growth forecast also saw a 0.3 percentage point increase to 1.3% due to larger AI investment.

China's growth is expected to slow to 4.5% in 2026 and 4.0% in 2027, both down 0.1 percentage point from July forecasts, as higher oil prices strain domestic demand despite strong exports. India remains the world's fastest-growing major economy, anticipated to grow at 7.0% for both 2026 and 2027, buoyed by strong domestic demand, services activity, and AI investment.