Ammon News - The International Monetary Fund held its 2027 global growth forecast at 3.4%, warning that the Middle East conflict and rising public debt threaten the economic outlook.

The IMF raised its 2026 growth forecast to 3.1% from 3.0% in July, as AI-related investment helped offset higher energy costs. The projection remains below the 3.5% growth recorded in 2025.

In its latest World Economic Outlook, released during IMF and World Bank annual meetings in Bangkok, the fund said global economic resilience was increasingly being tested.

Technology investment and efforts to redirect energy supplies had cushioned the Middle East conflict's impact, but these buffers were fading.

AI infrastructure spending has supported advanced economies and suppliers including South Korea, Malaysia, Mexico and Thailand.

The US and China account for more than three-quarters of global net import demand for chips and other AI equipment. Just 32 countries are expected to generate 95% of global growth, versus 54 in April, while 47% of economies have had forecasts downgraded since April.

Oil reserves, alternative suppliers and lower consumption have helped prevent global growth from falling to 2.5% in 2026, but these protections are diminishing.

AI could trigger a sharp investment and asset-price pullback if expected returns disappoint, though faster adoption could lift global GDP by 0.6% by 2029. IMF chief Kristalina Georgieva said AI could affect around 40% of jobs worldwide.

The IMF expects oil to average $96 a barrel in 2026, up nearly 41%, before falling to $87 in 2027. Its baseline assumes Strait of Hormuz shipping resumes in March 2027 and conditions broadly normalise by October.

If oil reaches $130 a barrel through the first quarter of 2027, global growth would be 0.2 percentage point lower in 2026 and 0.5 point lower in 2027, while inflation rises to 5.2% next year. Headline inflation is forecast at 4.7% in 2026 and 4.1% in 2027, versus 4.1% in 2025.

High public debt, deficits and borrowing costs are limiting governments' ability to cushion another energy shock. The IMF urged governments to rebuild fiscal buffers and stabilise debt, while advising central banks to distinguish temporary price increases from entrenched inflation.

The outlook depends on restored energy flows and continued AI investment; setbacks could mean weaker growth and more persistent inflation.