IMF: War and Artificial Intelligence Are Reshaping the Global Economy
IMF: Strait of Hormuz Disruptions Push Global Oil and Food Prices Higher
The International Monetary Fund (IMF) expects global economic growth to slow to 3% in 2026 before recovering to 3.4% in 2027, compared with an average growth rate of 3.5% in 2024 and 2025. In its July 2026 World Economic Outlook update, titled “The Global Economy at the Crossroads of War and Technology,” the IMF said the war in the Middle East has dealt a negative shock to the global economy, while rapid advances in artificial intelligence and AI-related investment have partly offset the impact by boosting demand and productivity in several economies. The Fund also forecast global inflation to rise from 4.1% in 2025 to 4.7% in 2026, before easing to 3.9% in 2027, as higher energy and food prices interrupt the disinflation trend.
The IMF warned that renewed escalation in the Middle East remains the most significant downside risk to the global economy, with the potential to further disrupt supply chains and drive commodity prices higher. It expects Brent crude to average $89 per barrel in 2026, up 9% from its April forecast, while natural gas prices are projected to reach $15, around 5% higher than previously estimated. The Fund also forecast global trade growth to slow from 5% in 2025 to 3.5% in 2026 before recovering to 4.3% in 2027, while urging policymakers to maintain price stability, rebuild fiscal buffers, accelerate investment in renewable energy and digital infrastructure, and strengthen international cooperation to support global economic stability.
