IMF Warns Middle East War Could Derail Global Economic Growth
The energy crisis sparked by the war in the Middle East remains the biggest risk for the global economy, but investment in artificial intelligence provides grounds for optimism, the International Monetary Fund has said, expecting global growth of 3.4% next year. “The global economy has been resilient, but that resilience is reaching its limits, so we need to move from just coping to rebuilding,”…
The International Monetary Fund (IMF) has warned that the war in the Middle East could disrupt global economic growth, with energy prices driving inflation across the economy. However, the institution remains optimistic about the potential for growth through investment in artificial intelligence (AI). IMF chief economist Silvana Tenreyro stated that while global resilience has reached its limits, action is needed to restore fiscal space and supply-side resilience.
IMF deputy research director Petya Koeva Brooks added that government measures such as oil reserve draws and diversification of suppliers have helped mitigate risks of major pain. Countries involved in AI hardware development, including South Korea, Malaysia, Thailand, and Mexico, are expected to have a better outlook than those not engaged in AI, according to the IMF.
The U.S. economy and European economies in the EU are also expected to benefit from AI exposure. However, countries most vulnerable to the energy crisis are facing significant challenges, with Saudi Arabia forecast to experience a GDP contraction of 3.3%, a sharp decline from earlier projections of 1.7% growth. Other Gulf states, including Iran, Iraq, Kuwait, the UAE, and Qatar, are also expected to see GDP contractions, with Iraq, Kuwait, and Qatar facing contractions of over 15%.
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