BANGKOK — The International Monetary Fund nudged up its forecast for world economic growth on Tuesday, even as it cautioned that the resilience shielding global markets from conflict and high energy prices may soon reach its breaking point.
In its latest World Economic Outlook released during the annual IMF and World Bank meetings in Bangkok, the lender projected the global economy will expand 3.1 percent this year, up from a July estimate of 3.0 percent. The anticipated pace remains slower than the 3.5 percent recorded last year, while the growth outlook for 2027 was left unchanged at 3.4 percent.
War shocks and depleted reserves
The fund noted that international activity held up better than anticipated over the last six months despite the conflict involving the United States and Iran. Emergency releases of crude supplies and cargo diversions away from the Strait of Hormuz helped prevent runaway energy markets, according to the report. However, with the U.S. Strategic Petroleum Reserve at its lowest level since 1982 and worldwide reserves draining by around 2.7 million barrels each day, policymakers possess fewer defenses against future shocks.
Crude prices are projected to rise nearly 41 percent this year to average 96 dollars a barrel, pushing global inflation to 4.7 percent before easing to 4.1 percent next year, ABC News reported. The IMF anticipates that tanker traffic through the Strait of Hormuz will resume by March and normalize by October.
Economic momentum is also concentrating in fewer territories. The IMF said 32 nations currently generate 95 percent of global expansion, compared with 54 countries in April. Energy importers outside high-tech manufacturing chains face heavy import bills and strained household budgets, leaving the euro zone projected to expand just 1.1 percent this year, while economies across the Middle East and Central Asia contract 0.3 percent.
Tech boom creates dual-edged risks
Surging investment in artificial intelligence has provided a critical demand buffer that helped cushion broader economic damage, CNBC reported. The United States is projected to expand by 2.3 percent in both 2026 and 2027, while tech-heavy Taiwan is forecast to grow 10.7 percent this year. India is projected to be the fastest-growing major economy at 7.0 percent, whereas China is expected to slow to 4.5 percent.
Yet that rapid technological investment has introduced fresh vulnerabilities, the fund warned in its Global Financial Stability Report. Valuations remain exceptionally concentrated, with seven major U.S. tech firms representing more than 35 percent of the S&P 500 index, The Guardian reported. Heavy borrowing by corporations, speculative trading by retail investors and complex financing partnerships could trigger steep market falls if projected productivity gains fail to appear.
The IMF modeled that an absence of AI productivity improvements could spark a 20 percent drop in U.S. equities and drag global economic growth 1.1 percentage points below baseline forecasts by 2028.
At the same time, national balance sheets leave little room to protect consumers. Advanced economy public debt is on track to climb to 115 percent of output by 2031, compared with 108 percent last year, the IMF reported.
Whether central banks can rein in persistent price pressures while avoiding financial instability remains uncertain as finance ministers continue negotiations in Bangkok, with geopolitical tensions and the timing of Middle East shipping recoveries still unresolved.
