IMF Sees AI Surge Offset War Oil Shock and Keeps Growth Outlook

st90yhf669k0wc9qbsapzc8o_media_dl_1.png International Monetary Fund

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(Bloomberg) — The International Monetary Fund left its global growth forecast largely unchanged for this year, saying that the boom in artificial intelligence helped offset the fallout from the conflict in the Middle East.

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“Global economic activity and the outlook are being shaped by two major forces, pushing in opposite directions with asymmetric effects across countries,” the Washington-based lender said in an update to its World Economic Outlook report. “The global economy as a whole has, so far, weathered the shock from the war better than feared.” 

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The fund expects growth of 3% in 2026, slightly down from the 3.1% predicted in April and below the 3.5% average recorded over the previous two years, according to the report published Wednesday. The IMF also warned that progress in bringing inflation down has stalled.

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Risks to the outlook are more balanced now than three months ago, given the US and Iran agreed to an interim peace deal in June. But they are “still tilted to the downside,” the IMF said, citing the prospect of renewed tensions in the Middle East, further trade fragmentation and the possible unraveling of AI-driven expectations. 

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Tensions flared again around the Strait of Hormuz on Tuesday after the US completed a fresh round of strikes following a series of attacks on merchant ships. President Donald Trump said the tentative ceasefire with Iran had ended as far as he’s concerned, but added he wouldn’t stop negotiators from continuing to engage. Western naval forces in the region warned that there could be lower levels of traffic in the coming days.

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“Durable peace agreements could rapidly restore global trade routes and supply chains,” the IMF said in the report.

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The lender increased its growth outlook for 2027 to 3.4% from 3.2% in April.

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At the same time, the IMF expects higher global consumer prices, raising its projections to a 4.7% gain this year from 4.4% previously, mainly due to energy and food costs.

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Positive Surprise

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The most significant downgrades in the growth outlook were in the Middle East region. Saudi Arabia saw its 2026 projection cut by 1.4 percentage points to 1.7% from 3.1% previously. Meanwhile, the IMF left its projection for the US unchanged at 2.3%.

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Much of what the lender called a “positive surprise” was concentrated in Asia among a few economies that are plugged into the AI supply chain, with exporters of related hardware outperforming in spite of their exposure to energy and trade disruptions linked to the war.

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Among them is South Korea, whose economy rose an annualized 7.5% in the first quarter, more than four times the 1.8% projected in April, “despite its heavy reliance on imported energy from the Middle East,” the IMF said.

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Thailand, Malaysia and Taiwan also outpaced expectations, benefiting from booming demand for AI-related equipment. 

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Growth for Thailand this year was revised up to 1.9% from 1.5%, reflecting emergency fiscal measures and robust technology-related exports and investment, the report said. Malaysia will benefit from a data center boost.

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