IMF raises global growth forecast despite energy crisis

The International Monetary Fund (IMF) has projected that the global economy will grow by around 3.1 percent in 2026.

In its World Economic Outlook report released on Tuesday, the Fund revised its July forecast upward by 0.1 percentage points. The global growth rate in 2025 stood at around 3.5 percent.

The report notes that although the war in West Asia has made energy more expensive, demand and investment linked to artificial intelligence (AI) have supported growth. The Fund said the price of refined petroleum products has risen by around 70 to 95 percent compared to before the war.

The IMF has warned that as oil reserves decline and the cost of borrowing rises, the world's ability to absorb another major shock has weakened.

The Fund has lowered its growth forecast for China to around 4.5 percent, down 0.1 percentage points from its July estimate, and projects it will fall further to around 4 percent in 2027.

The report says low-income countries dependent on energy imports will be hit hardest by inflation and supply crises.

IMF chief economist Pierre-Olivier Gourinchas said that if the war drags on, inflation will rise and economic growth will slow. Speaking at the IMF-World Bank annual meetings in Bangkok, he said AI-related demand has supported growth in China, India and other Asian countries. He urged countries to cut budgets to reduce deficits and called on central banks to adopt tight policies to control inflation.