IMF raises its forecast for world growth this year but says economies will slow in 2027

IMF Slightly Lifts Global Growth Forecast to 3.1% Amid Slowing Economies
<​p class="EkqkG IGXmU nlgHS yuUao MvWXB TjIXL aGjvy eyebrow">BANGKOK — The International Monetary Fund on Tuesday slightly increased its forecast for global economic growth this year, projecting a modest 3.1% expansion.

Previously, the IMF had estimated global growth at 3.0% later that month, while the world actually expanded at 3.5% annually in 2025.

According to the latest Economic Outlook, growth in the United States is set to stay flat at 2.3% in 2026 and 2027.

The report projects that oil prices could rise nearly 41% this year, averaging $96 per barrel, pushing global inflation upward to 4.7% in 2026 from 4.1% last year.

Released ahead of next week’s IMF and World Bank summits in Bangkok, officials note that the surge in AI demand is helping offset the drag from sharp rises in oil and gas costs.

Yet the benefits of the AI boom are unevenly distributed; the United States and China together command more than three‑quarters of net imports for computer chips and other AI‑related equipment, the study says.

“The outlook is highly uneven,” said Silvana Tenreyro, IMF’s director of research, when speaking with reporters in Bangkok.

Growth has become increasingly concentrated, with 32 nations driving roughly 95% of global output—down from 54 countries as recently as April.

“The global economy is not merely slowing or accelerating,” the document explains; instead, growth is being reshaped regionally because of varied exposures to wartime supply shocks and differential reliance on AI‑driven demand dynamics.

Discussions at the Bangkok gathering highlight that AI’s impact on labor markets stands out as a key concern, leading IMF Managing Director Kristalina Georgieva to warn of “a slow‑moving tsunami, but definitely one.”

The IMF warns that global debt levels present a growing threat to financial stability, urging policymakers at both wealthy and emerging economies to strengthen fiscal foundations.

Forecasts indicate that advanced economies will inch upward to 2.1% growth this year from 2.0% in 2025, before narrowing to 1.9% next year.

These projections assume that oil and gas shipments through the Strait of Hormuz will resume by March and that the AI‑driven demand surge will moderate.

While U.S. growth is projected to be flat at 2.3%, certain countries insulated from energy price spikes and buoyed by rapid AI adoption continue to meet their targets. Conversely, developing and emerging markets more exposed to oil‑and‑gas cost increases are expected to decelerate to 3.7% this year from 4.5% in 2025, though the report anticipates a rebound at 4.4% next year.

The recovery is far below expectations for the Middle East and Central Asia, where regional economies are forecast to contract before rebounding to 6.3% growth in 2027.

The twenty‑one European Union members are expected to post 1.1% growth this year and 1.2% in 2027. The world’s second‑largest economy, China, is slated for 4.5% expansion this year, a cut from 5% in 2025, aligning with official government targets.

Meanwhile, India shows renewed momentum as the world’s fastest‑growing major economy, advancing at 7% in 2025—a decline from its prior 7.7% YoY rise.

As a multilateral institution serving 191 nations, the IMF strives to foster sustainable growth and financial resilience while reducing global poverty. Analysts will evaluate the global economic landscape and explore strategies for stability and continued prosperity during the Bangkok sessions.

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AP journalists Haruka Nuga and Tian Macleod Ji contributed.

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