IMF Raises 2026 Global Growth Forecast to 3.1%, Citing AI Investment Offsetting Middle East Conflict

The International Monetary Fund (IMF) raised its 2026 global economic growth forecast to 3.1% in its latest World Economic Outlook, an increase of 0.1 percentage points from July's projection.

This revision reflects a structural divergence in macro drivers: the artificial intelligence (AI) investment boom boosted certain economies, offsetting the drag from Middle East conflicts on others. The growth outlook for advanced economies was significantly revised up by 0.4 percentage points to 2.1%, while emerging and developing economies were downgraded by 0.1 percentage points to 3.7%.

Specifically, the US economy is expected to grow 2.3% this year and next, supported by tech investment and consumption; the Eurozone will only grow 1.1%, weighed down by high energy prices. Conversely, Saudi Arabia's economy is projected to contract by 3.3% in 2026, a 5-percentage-point downgrade from previous forecasts, with energy exporters like Bahrain and Iraq facing double-digit contractions.

The IMF warned that disruptions to shipping in the Strait of Hormuz could reduce global growth by 0.9 percentage points, although net impacts were mitigated by oil rerouting and strategic reserve releases. Global headline inflation is expected to rise from 4.1% in 2025 to 4.7% in 2026, before falling back to 4.1% in 2027.