BANGKOK, Thailand — The International Monetary Fund on Tuesday raised its forecast for global growth this year to 3.1% from 3% but warned that the world economy “could soon test the limits of resilience” as emergency oil stocks run low and government budgets are stretched thin, Reuters, via CNA, and The Guardian reported.
“The global economy has been resilient, but that resilience is reaching its limits, so we need to move from just coping to rebuilding,” IMF chief economist Silvana Tenreyro said as the World Economic Outlook was released at the IMF and World Bank annual meetings in Bangkok. The fund kept its 2027 forecast at 3.4%, below 2025 growth of 3.5%. The slight upgrade rests largely on heavy investment in artificial intelligence, which is offsetting the energy shock from the war in the Middle East.
Gulf states took the hardest hit. The IMF now expects Saudi Arabia’s economy to shrink 3.3% this year, compared with 1.7% growth forecast in July, and sees deep recessions in Iran, Iraq, Kuwait, Qatar and the United Arab Emirates, with contractions of 7.6%, 16%, 16.7%, 15.6% and 3.9%, respectively, CNA reported. U.S. growth is forecast at 2.3% in 2026 and 2027, China at 4.5% this year, and India at 7%, still the fastest among major economies. Just 32 countries now account for 95% of global growth, down from 54 in April.
The forecasts assume the Strait of Hormuz reopens in March 2027 and oil averages $96 a barrel this year. “Inventories in energy markets are dwindling and additional geopolitical shocks could still transmit rapidly through prices and supply disruptions,” the report said, according to The Guardian. Under an adverse scenario with oil at $130 through early 2027, growth next year would be 0.5 percentage point lower.
In a separate Global Financial Stability Report, the IMF warned that a correction in richly valued AI stocks “could be global,” listing it with rising government borrowing costs and a major cyberattack as “plausible near-term catalysts” for market turmoil. “The exposure of the rest of the world to US assets, particularly AI, is the highest it has ever been,” said Athanasios Vamvakidis, deputy director of the IMF’s monetary and capital markets department, The Guardian reported.
Sources: CNA (Reuters), The Guardian, The Guardian (financial stability)
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