The IMF lifted 2026 global growth to 3.1% as 32 economies now drive 95% of it
US equities could fall 20 percent and global growth could finish 1.1 percent below baseline by 2028, with Asia 1.7 percent lower, in a scenario where AI productivity gains fail to materialize.
The projection sits in the International Monetary Fund’s World Economic Outlook, released Tuesday at the IMF and World Bank annual meetings in Bangkok.
The same report raised the global growth forecast for 2026 to 3.1 percent, up from the 3 percent projected in July 2026 and below the 3.5 percent recorded in 2025.
Growth for 2027 was left unchanged at 3.4 percent.
Inflation was put at 4.7 percent in 2026 and 4.1 percent in 2027, the latter revised up from 3.9 percent in July.
The forecasts assume oil averages US$96 a barrel this year, a rise of nearly 41 percent, and that shipments through the Strait of Hormuz resume by March 2027.
“The global economy has been resilient, but that resilience is reaching its limits,” Silvana Tenreyro, economic counsellor and director of the IMF research department, told reporters in Bangkok in comments carried by CNBC.
She said monetary policy should stay “sufficiently restrictive” to return inflation to target in a timely way.
IMF’s Global Financial Stability Report warned against “complacency” in markets, naming an AI-driven selloff, a spike in sovereign bond yields and a major cyberattack as plausible near-term catalysts.
“An AI market correction will affect the real economy,” Athanasios Vamvakidis, deputy director in the IMF’s Monetary and Capital Markets Department, said at a press briefing in Bangkok reported by Reuters.
Risk sentiment was strong, he said, but such “resilience is not necessarily safety.”
Leverage in the sector could amplify a shock through forced selling and higher volatility.
Hyperscalers now account for 10 percent of global investment-grade bond issuance, up from less than 1 percent in 2024.
Selloffs in AI-related shares swept Asia on Tuesday, CBC reported, with South Korea’s Kospi sinking as much as 7 percent before closing 5.5 percent lower.
Thirty-two economies now account for 95 percent of global growth, down from 54 in April 2026.
“The global economy is not simply slowing or accelerating; rather, growth is being reallocated across countries according to their exposure to the war-induced supply shock and AI-related demand strength,” the report said.
Advanced-economy benchmark yields have climbed to multidecade highs on resurgent inflation, the expected path of policy rates and fiscal concerns, with technology firms borrowing to finance AI investment adding to the pressure.
Public debt in advanced economies is projected to reach 115 percent of GDP by 2031, from 108 percent in 2025.
Vamvakidis told the Bangkok briefing, as reported by Reuters, that the market is concerned about “absorption potential of the huge issuance that is coming from the sovereigns.”
He said private sector issuance is also increasing “at the time that central banks are shrinking their balances.”
Banks representing 22 percent of global banking assets showed weak capital levels under the IMF’s stress test of an AI slowdown paired with bond market fragility, up from 18 percent in the 2025 test, Reuters reported.
The IMF’s models put the probability that global inflation exceeds 5 percent in 2027 at about 35 percent, up from 30 percent in April 2026.
