The International Monetary Fund (IMF) announced that global economic growth will exceed 3% this year, as strong investment in artificial intelligence offsets the shock from the war in the Middle East. However, downside risks are increasing, and more countries are facing rising debt burdens.
Forecasts and Contributing Factors
Despite prolonged conflicts that have kept oil prices above $100 a barrel, the International Monetary Fund has projected that global growth will reach 3.1% in 2026, slightly up from the 3.0% forecast in July. This forecast comes as global economic and financial officials gather in Bangkok for the annual meetings of the International Monetary Fund and the World Bank. The forecasts for global economic growth in 2027 have also been revised to 3.4%, consistent with previous estimates.
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Challenges Ahead and Regional Impacts
According to Silviana Tenreiro, senior economist at the International Monetary Fund, "The global economy has shown resilience, but this resilience is under pressure and downside risks are impactful." Ongoing wars in the Middle East could exert additional pressures on inflation and slow growth. Meanwhile, Gulf countries directly affected by the wars between the United States and Israel against Iran have been severely impacted. Saudi Arabia's GDP is projected to decline by 3.3% this year.
Iran, Iraq, Kuwait, Qatar, and the United Arab Emirates are also expected to enter deeper recessions, with their GDPs projected to decline by 7.6%, 16%, 16.7%, 15.6%, and 3.9%, respectively.
In contrast, other countries like South Korea, Malaysia, Mexico, and Thailand, which are active in providing artificial intelligence hardware, will see their growth increase due to strong investment in AI infrastructure.
Furthermore, the International Monetary Fund has warned that high levels of public debt, especially in advanced economies, pose a risk of significantly rising borrowing costs, which could negatively impact growth prospects. The institution has urged governments to avoid delaying necessary actions to rebuild their financial balances.
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