The International Monetary Fund has raised its 2026 global growth forecast to 3.1% from 3.0% in July, but says growth is concentrated in 32 countries and could be hit by an AI-related market correction, rising bond yields and cyber attacks.
The International Monetary Fund raised its forecast for global growth in 2026 to 3.1% from 3.0% in its October World Economic Outlook, released on 13 October 2026, according to Fortune. It expects growth of 3.4% in 2027, and the figures compare with 3.5% in 2025. Global inflation is projected at 4.7% in 2026 and 4.1% in 2027, according to the report.
The forecast rests on assumptions. A summary of the IMF’s outlook says that it assumes oil and gas shipments through the Strait of Hormuz resume by March and that the boom in AI demand moderates. The oil price assumption is an average of about $96 a barrel in 2026, an increase of about 41% on the year, according to Fortune.
By region, the United States is forecast to grow 2.3% in both 2026 and 2027, advanced economies 2.1% in 2026 and 1.9% in 2027, and the euro area, of 21 countries, 1.1% in 2026 and 1.2% in 2027, according to Fortune. China is forecast at 4.5%, down from 5% in the earlier forecast, and emerging and developing markets at 3.7% in 2026 and 4.4% in 2027. India is forecast at 7.0%, which Fortune reports as down from 7.7%, although another report says the forecast was raised from 6.4% in July for fiscal 2026-27, so the comparison depends on the earlier figure used.
The report’s main theme is divergence. Just 32 countries account for 95% of global growth, compared with 54 countries in April, according to Fortune, and the United States and China account for more than three-quarters of the net demand for AI chips and equipment. Countries that benefit from the AI investment boom or from favourable terms of trade are doing relatively well, while many energy-importing and lower-income economies face a much harder environment, according to a search summary of the fund’s text.
The IMF’s managing director, Kristalina Georgieva, is quoted as saying that the effect over time on jobs globally is estimated to be around 40%. The source does not give the full context, and the sentence is reported as a quotation from her remarks and not as part of the forecast itself, so it should not be read as a prediction that 40% of jobs will be lost.
The risks listed are AI-related stock market corrections, rising bond yields and cybersecurity threats to financial systems, according to the report. A Tech Times headline says that an AI correction could erase the entire gain from the upgrade. These risks are visible in recent markets: US shares had their worst day since July on 14 October as AI stocks fell, and the 10-year Treasury yield was 5.19%, as Delima News reports.
The upgrade is small, from 3.0% to 3.1%, and the forecast for 2026 is below the 3.5% of 2025. The IMF is therefore describing slower growth than last year with a slightly better outlook than it had in July, and with inflation well above the level of recent years.
The fund’s forecasts are published twice a year and are revised often, and the numbers for 2027 depend on the Gulf assumptions being correct. If shipping through the Strait of Hormuz does not resume by March, the oil assumption would be too low.
Image: The IMF building in Washington (file photo). Photo: Tony Webster / Wikimedia Commons (CC BY 2.0)
