IMF Raises 2026 Global Growth Forecast to 3.1%, Citing AI Investment Boost

The International Monetary Fund (IMF) has slightly raised its global economic growth forecast for this year, stating that the global economy is once again demonstrating resilience.

In the World Economic Outlook (WEO) report released on October 12 (local time), the IMF projected this year's global economic growth at 3.1%, up 0.1 percentage points from its previous forecast in July.

The IMF's global growth projection for this year, which stood at 3.3% in January, was successively downgraded to 3.1% in April following the outbreak of the Iran war, and to 3.0% in July, before rebounding this time.

The economic growth forecast for next year was maintained at 3.4%, unchanged from July.

The IMF assessed that "the global economy is once again showing resilience, but it remains unbalanced and the room for short-term adjustment is narrowing rapidly," adding that "despite persistent pressures from the protracted war in the Middle East and trade tensions, economic activity in the first half of 2026 remained stronger than expected."

Regarding the background behind the slight upward revision in growth, the IMF explained that "the technology cycle has stimulated demand through robust investments in artificial intelligence (AI)," and that countries' "flexible supply responses, rerouting of shipments, inventory reductions, fiscal support, and lower energy intensity compared to previous decades have thus far contributed to mitigating the economic blow from the war."

However, the IMF pointed out that the global economy has become polarized. While favorable terms of trade, tech-related exports, and investments provided a buffer for some countries, others faced rising import costs and weakened demand.

It added that while private companies have continued to adapt to recurring shocks such as geopolitical risks and shifts in trade policy, this room for adjustment is not infinite.

In addition, the IMF diagnosed that "risks are skewed to the downside," meaning the risk of growth falling short of projections is somewhat greater.

Factors expected to weigh on global economic growth include a prolonged deadlock and further escalation of tensions in the Middle East, additional disruptions to energy infrastructure, cyberattacks, extreme weather events, and a downward reassessment of AI profitability and productivity outlooks.

The IMF noted that "upside risks are also evident," pointing out that AI-related investments could prove more persistent than expected, productivity gains could materialize faster than assumed, new trade agreements could enhance predictability and resilience, and rising fossil fuel prices could accelerate investments in energy security.

Looking at the WEO by country, the U.S. economic growth rate for this year is projected at 2.3%, the same as the July forecast.

The growth forecast for next year was slightly raised to 2.3% from July (2.2%).

The eurozone is projected to grow by 1.1% this year.

This is a 0.2 percentage point upward revision from the July forecast of 0.9%, which the IMF attributed to very strong recovery in Ireland and sustained growth momentum in Spain.

The eurozone's growth rate for next year is projected at 1.2%, matching the July forecast.

Japan is expected to grow by 0.7% this year, a slight increase from July (0.6%), and maintain a 0.7% growth rate next year.

The IMF projected South Korea's growth rate at 3.3% for this year and 2.8% for next year.

This represents a significant upward revision from the July projections of 2.6% for this year and 2.5% for next year.

As the reason for upwardly revising South Korea's growth outlook, the IMF cited "strong external demand for semiconductors that outweighs the negative impacts of the war."

Economic growth in emerging and developing economies is projected to slow to 3.7% this year before recovering to 4.4% next year.

The growth forecasts for this year and next year were both lowered by 0.1 percentage points from July.

For China, the IMF expects growth of 4.5% this year, down 0.1 percentage points from July.

The Middle East and Central Asia, which bore the direct brunt of the war, are expected to see their growth rate retreat to -0.3% this year before rebounding sharply to 6.3% next year.

The IMF explained that because the closure period of the Strait of Hormuz is expected to be longer than initially projected, followed by a larger rebound once the strait reopens, this year's growth forecast was revised down by 2.2 percentage points and next year's growth forecast was revised up by 1.7 percentage points compared to the April projections.

For Iraq, Kuwait, and Qatar, which suffered the heaviest blows from energy production and transportation disruptions, the IMF projected that after experiencing double-digit economic contraction this year, they will record double-digit growth rates next year as production, exports, and logistics normalize.

The global inflation forecast for this year stood at 4.7%, unchanged from July, while next year's inflation is expected to ease to 4.1%.

Global trade volume growth is projected to slow from 5.0% last year to 4.6% this year, before stabilizing at 4.7% next year, according to the IMF.

In this report, the IMF advised that given high debt levels, rising government bond yields, and urgent spending needs, the necessity to rebuild fiscal space is becoming increasingly pressing, recommending the implementation of "credible fiscal consolidation plans combining revenue enhancements and expenditure rationalization based on institutional improvements."

(Photo: Capture from International Monetary Fund X (formerly Twitter), Yonhap News)
※ Please note: This article was translated by AI and may contain errors.