Global economy proving resilient, growth projected at 3.1% in 2026 – IMF

The International Monetary Fund (IMF) reports today that the global economy is showing signs of resilience, though growth is uneven across nations. According to their October 2026 World Economic Outlook, activity in the first half of 2026 outperformed expectations, even with the ongoing conflict in the Middle East and trade tensions persisting.

The technology sector has been a key driver of demand, fueled by substantial investment in artificial intelligence (AI). Geopolitical concerns and technological advancements have created a bifurcated global economy, with certain countries benefiting from favorable trade terms or technology-driven exports and investments, while others grapple with increased import costs and weaker demand.

Despite these disparities, the IMF anticipates global growth of 3.1% in 2026 and 3.4% in 2027, maintaining the same forecast from April 2026. Inflation is also expected to rise to 4.7% in 2026 before easing slightly to 4.1% by 2027, marking a cumulative upward adjustment of 0.7 percentage points. The increase is primarily attributable to temporary boosts in energy and food prices.

World trade volumes are projected to decelerate in 2026 before stabilizing in 2027, influenced by factors like tariffs, production chain adjustments, and the enduring strength of technology-related trade.

However, the IMF warns that global imbalances will only marginally decrease over the medium term, due to factors such as significant fiscal deficits, limited domestic rebalancing, technology-driven capital flows, and differing demand patterns among major economies, even under current policies. The medium-term growth outlook remains modest compared to historical standards and varies significantly across countries, largely due to differences in AI readiness and the robustness of their energy systems.

The IMF also highlights that risks are mostly on the downside. A prolonged conflict or further escalation in the Middle East could keep energy and food prices high and volatile, reignite inflation, exacerbate fiscal and external imbalances, and negatively impact growth. Additionally, further disruptions to energy infrastructure, cyberattacks, or extreme weather events could amplify these consequences.

The IMF notes that physical supply disruptions have a more substantial and lasting impact on macroeconomics than mere geopolitical risks. A reassessment of AI-related profitability and productivity could lead to reduced investment, equity market corrections, and tightened financial conditions, affecting economies reliant on technology supply chains and technology-related investments.