The International Monetary Fund (IMF) lowered its forecast for global
economic growth in 2026, warning the artificial
intelligence (AI) boom has not offset the economic losses caused
by wars in the MENA region and its impact on energy markets, supply
chains and prices.
According to the fund’s latest estimates, the global economy is now expected to grow by 3.0% in 2026, down from its 3.1% projection in April. This marks the IMF’s second downward revision this year, a slowdown from 2025. Growth is expected to recover to 3.4% in 2027.
Despite the downgrade, the IMF described the slowdown as “modest,” noting strong momentum in the technology sector, particularly in AI, continues to support global economic activity and partially cushion the effects of geopolitical instability.
Energy Disruptions Raise Inflation Risks
The IMF attributed the weaker outlook to conflicts, particularly disruptions to oil and gas flows through the Strait of Hormuz. It said the exchange of attacks between Iran and the US partially disrupted maritime traffic, driving energy prices higher and increasing pressure on economies worldwide, especially those that rely heavily on energy imports.
The IMF expects global inflation to reach 4.7% in 2026, above its previous forecast, as higher energy and commodity prices continue to affect markets. It warned the full economic effects of the conflict have yet to emerge, although releases from strategic petroleum reserves have temporarily eased the impact of reduced supplies.
Deniz Igan, a senior official in the IMF’s research department, said the fund’s projections remain “broadly unchanged over the next two years” and described the expected trajectory as a “V-shaped recovery.” However, she added that “the delayed recovery from the war on Iran, longer disruptions, and higher prices are all factors that will cause the global economy to take a bigger hit this year.”
Technology Provides a Buffer
The IMF identified investment in AI and advanced technology as a key source of resilience. Countries integrated into technology supply chains or producing AI hardware have outperformed expectations despite indirect exposure to the effects of the conflict.
The fund said energy
exporters outside the conflict zone have benefited from improved
terms of trade, while economies linked to the technology sector have
maintained stronger growth even when they are net energy importers.
In contrast, countries that depend on energy imports but
have limited participation in technology supply chains continue to
face weaker economic activity. Among the stronger performers, the
report highlighted Taiwan, South Korea, Thailand and Malaysia, where
demand for semiconductors and advanced technology equipment has
continued to support growth.
Regional Outlook Remains Uneven
Although the global economy demonstrated resilience, the IMF said differences remain across regions. It projects US economic growth at 2.3% this year, while lowering its forecast for the Middle East and Central Asia to 0.7% due to conflict and prolonged disruption of shipping through the Strait of Hormuz. The IMF also reduced growth forecast for the eurozone to 0.9% and for France to 0.6%, while slightly raising China’s projection to 4.6%.
The IMF warned the risk of renewed conflict remains high and could prolong commodity price volatility, disrupt supply chains and accelerate trade fragmentation. At the same time, it said continued advances in AI and related technologies could help support global growth if geopolitical tensions do not worsen.