The International Monetary Fund expects global economic growth of 3.1% in 2026 and 3.4% in 2027, but warns that higher energy prices, concentrated AI investment and rising debt costs are leaving countries less able to absorb further shocks.
The forecasts accompanied the IMF’s October outlook, presented in Bangkok on October 13. They describe expected growth in economic output after adjusting for inflation, rather than an increase in prices alone.
At an October 14 briefing, Managing Director Kristalina Georgieva said the economy remained resilient, but its ability to withstand repeated disruption was reaching its limits. Energy and government financial reserves were being depleted while inflation remained high in many places.
Energy costs and technology spending pull in opposite directions
IMF Chief Economist Silvana Tenreyro described two forces behind the outlook. Higher energy and commodity prices associated with the Middle East war were restricting production and pushing up costs. Spending on artificial intelligence was lifting investment and trade.
In the outlook briefing, she put this year’s growth rate 0.4 percentage points below last year’s. The world economy can keep expanding while individual businesses face weaker orders or more expensive inputs.
For a company buying fuel, moving goods or operating energy-intensive machinery, growth elsewhere does not remove pressure on its own costs. Equally, strong demand for computing equipment does not necessarily translate into stronger demand across every industry.
Growth depends heavily on a narrower group of businesses
Tenreyro warned that AI supply chains were concentrated in a limited number of countries, sectors and firms. That makes a source of economic growth vulnerable to bottlenecks.
Georgieva said economies closely connected to those supply chains were generally doing better, including several in Asia. Low-income countries and fragile states faced greater difficulties, particularly where they imported energy or had little participation in the technology boom.
The IMF also identified extreme weather associated with El Niño as a further risk to commodity supplies. Our earlier coverage explains how El Niño can affect farming, power and trade.
Governments have less room to respond
Higher borrowing costs and interest payments can leave governments with less money for other spending, Tenreyro said. Fiscal buffers are the financial room available to respond to a downturn or emergency without making an already strained debt position worse.
Georgieva called for stronger revenue collection, more disciplined spending and better management of public finances. She said governments should also strengthen competition and invest in digital and energy infrastructure.
For assistance with rising food and energy costs, her instruction was to “Protect people, not prices.” The IMF’s October analytical work favors temporary, targeted transfers to vulnerable households. Broad price suppression can cost considerably more, leaving less money available if another shock arrives.
