IMF flags risks to global economy from AI market correction, war and debt
SPY•The IMF forecast global growth of 3.1% in 2026 and 3.4% in 2027, while warning that a steep drop in AI investment could cut global GDP by 1.1% by 2028. A prolonged Middle East war could reduce 2027 growth by 0.5 percentage point.
1. Growth outlook
The IMF forecast global growth at 3.1% in 2026, up from its July forecast of 3.0%, as strong AI infrastructure investment offsets higher oil prices caused by the Middle East war. It projected 3.4% growth in 2027, assuming the Strait of Hormuz reopens by March and shipping conditions return to their pre-war situation by October 2027. Oil prices above $130 through the first quarter of 2027 in a deeper-war scenario would cut growth next year by 0.5 percentage point.
2. AI investment risks
The IMF said a steep drop in AI investment, prompted by disappointment in productivity gains or profitability, could drive asset prices lower and cut global GDP by 1.1% by 2028, including a 1.8% drop in US output. Officials warned that questions about AI monetization could erode equity investments, make debt harder to service and prevent expected revenue from materializing. The IMF said this scenario was not likely to reduce growth to levels consistent with a global recession.
3. Debt and fiscal pressures
The IMF also warned that elevated public debt and bond yields could raise debt-servicing costs and sap growth. Developing countries were paying $500 billion more for their debt than developed countries, Nigerian Finance Minister Taiwo Oyedele said. The IMF urged governments to bring budgets under control and praised Britain for setting out plans to reduce borrowing.
