Rabat – The International Monetary Fund (IMF) has slightly raised its 2026 global growth forecast but warned that the economic fallout from the Iran war could widen the gap between wealthier economies and poorer countries that depend on imported energy.
In its World Economic Outlook, released Tuesday at the IMF and World Bank Annual Meetings in Bangkok, the Fund projected global growth of 3.1% this year, up 0.1 percentage points from its previous estimate. The forecast compares with 3.5% growth in 2025.
The modest upgrade reflects stronger-than-expected performance in advanced economies, where investment in artificial intelligence (AI) has helped sustain economic activity despite higher energy costs. However, the benefits remain uneven, leaving low-income countries with fewer resources to absorb the shock.
“The global economy has been resilient, but that resilience is under strain, with risks tilted to the downside,” IMF chief economist Silvana Tenreyro told journalists in Bangkok.
The Fund warned that a prolonged conflict could push inflation higher, weaken public finances, and disrupt trade. A slowdown in AI-related investment could add to those pressures if expectations for future profits and productivity gains fail to materialize.
Energy costs put import-dependent economies under pressure
The US-Israeli war against Iran, launched in February, has shaken global energy markets and driven up the cost of refined petroleum products. According to the IMF, prices remain between 70% and 95% above their pre-war levels.
For countries that rely on imported fuel to power transport, industry, and other economic activities, the increase creates an additional burden on public finances and household budgets. Low-income economies face particular difficulties because they often have less room to subsidize essential goods or cushion consumers from price increases.
The IMF described the resulting outlook as increasingly divided, with countries exposed to energy disruptions facing a markedly different economic trajectory from those benefiting from the technology investment boom.
“Headwinds from a prolonged war and persistent geopolitical tensions could revive inflationary pressures, strain fiscal and external positions, and hit energy-importing and low-income countries hardest,” the report said.
At the same time, the Fund warned that the AI boom is not guaranteed to last. If investors reassess the expected returns from AI technologies, a pullback in investment could weaken growth and tighten financial conditions worldwide.
Tenreyro told Agence France-Presse that AI accounted for nearly half of the increase in global trade between 2023 and 2025, underlining the technology’s growing influence on the world economy.
IMF Managing Director Kristalina Georgieva also pointed to a shift in how governments must approach economic policy, as geopolitical risks increasingly shape decisions on trade, investment, and supply chains.
“We have to recognise that the world that used to value only one thing, economic efficiency … now is a world in which security considerations have to be factored in,” Georgieva said during a panel discussion.
Middle East growth forecast turns negative
The economic damage is particularly pronounced in regions directly exposed to the conflict. The IMF expects the Middle East and Central Asia to contract by 0.3% in 2026.
Saudi Arabia faces an especially sharp revision, with the Fund projecting a 3.3% contraction in its economy. That marks a five-percentage-point downgrade from its previous forecast.
Although the IMF expects regional economies to recover relatively quickly after the war ends, the uncertainty surrounding the conflict makes the timing of any rebound difficult to predict.
The outlook is more favorable for advanced economies, which are forecast to grow by 2.1% this year. Economies closely tied to the AI supply chain, including Taiwan and South Korea, are expected to perform more strongly.
China, meanwhile, faces slower growth, largely because of weak domestic demand.
The broader inflation outlook has also deteriorated. Global inflation is expected to reach 4.7% in 2026, increasing pressure on consumers and complicating efforts by central banks to maintain price stability.
IMF calls for targeted support and fiscal discipline
The Fund urged governments to respond to higher food and energy costs without committing to expensive measures that could worsen their debt burdens.
Years of elevated public borrowing have left many countries with limited fiscal flexibility. The challenge is particularly acute in developing economies, where governments must address immediate needs while preserving their ability to manage debt over the longer term.
Deniz Igan, chief of the IMF’s World Economic Studies division, said policymakers must balance short-term priorities, including food and energy security, with the need to maintain medium-term economic stability.
The Fund recommended temporary, targeted assistance for households and businesses most affected by rising costs, rather than broad measures that could place additional strain on public finances.
It also called on central banks to keep inflation under control. Where price pressures persist, interest rate increases may remain necessary, even as higher borrowing costs weigh on economic activity.
“Macroeconomic and financial stability is your first line of defence. It is a source of security,” Georgieva said.
The IMF’s latest projections suggest that global growth has so far weathered the energy shock better than expected. However, the revised forecast offers little reassurance to countries that face rising import bills, limited fiscal resources, and few direct gains from the AI boom.
For these economies, the duration of the conflict and the trajectory of energy prices could prove more consequential than the modest improvement in the global growth outlook.
