IMF boosts this year’s global economy growth outlook, but warns of risks from AI and debt

The International Monetary Fund raised its forecast for global economic growth this year, forecasting a 3.1% expansion but sounding a warning about potential risks from artificial intelligence and mounting debt levels. The IMF projects a 2.3% growth rate for the United States in 2026 and 2027, while advanced economies collectively will expand by 2.1% this year, down from 2.0% in 2025, and then decelerate to 1.9% next year.

The forecast is based on a 41% hike in oil prices, averaging $96 per barrel, and an anticipated dip in global inflation from 4.7% in 2026 to 4.1% in 2027. The IMF also expects shipments of oil and gas through the Strait of Hormuz to resume by March. The surge in artificial intelligence demand is both boosting and threatening economic growth, the IMF says, but it is uneven, with the United States and China accounting for more than three-quarters of the net demand for AI-related equipment.

IMF Director of Research Silvana Tenreyro stated that the growth is becoming increasingly concentrated, with 32 countries contributing to 95% of global growth, compared to 54 countries as of April. The report highlights major risks such as an AI-related correction in stock markets, a rising in bond yields, and cyber threats that could disrupt financial systems.

IMF Managing Director Kristalina Georgieva cautioned that AI may adversely affect employment, with an estimated 40% of jobs globally either augmented, downgraded, or eliminated. The IMF emphasizes the need for countries to enhance their fiscal health and manage debt, especially considering the high borrowing costs in the current economic climate.

While some economies, especially those insulated from energy shocks and benefiting from AI adoption, are maintaining growth, developing economies and emerging markets are likely to experience a slowdown in growth, contracting this year at 3.7% from 4.5% in 2025, before regaining momentum next year at a 4.4% annual rate. The Middle East and Central Asia are expected to face a contraction in 2026, followed by a recovery to a 6.3% growth rate in 2027.

The eurozone, comprising 21 countries, is projected to grow by a mere 1.1% in 2026 and 1.2% in 2027. China, the world's second-largest economy, is forecast to expand by 4.5% this year, down from 5% in 2025, in line with its official target. India is expected to remain the fastest-growing major economy, with a 7% growth rate, down from 7.7% in 2025.