Despite the marginal improvement, the IMF cautioned that the current resilience is “reaching its limits.” The fund warned that emergency energy stocks are dwindling and that high debt levels in many countries are leaving governments with limited capacity to protect consumers from future price spikes. “Without shoring up supply capacity and replenishing policy buffers, the global economy could soon test the limits of resilience,” the report stated.
The growth outlook is heavily influenced by the AI sector, which has provided a significant “demand impulse” to global activity. The United States and China account for more than three-quarters of the net demand for computer chips and other AI-related equipment. This concentration of growth has led to a highly uneven global landscape, with 32 countries now accounting for 95% of global growth, a sharp decline from the 54 countries that contributed to this level of growth in April.
Energy prices remain a critical variable in the IMF’s projections. The forecasts are based on a nearly 41% increase in oil prices this year, with the average price estimated at $96 a barrel. The fund assumes that oil and gas shipments through the Strait of Hormuz will resume by March 2027, with conditions returning to pre-war levels by October of that year. Gulf crude exports had averaged 88% of pre-conflict levels in September as traffic began to pick up.
However, the system’s vulnerability is evident in the depletion of strategic reserves. The International Energy Agency announced the largest-ever emergency releases of oil stocks in March, but inventories in energy markets are still dwindling. Global oil reserves are being drawn down by approximately 2.7 million barrels a day, nearing levels that could trigger sharp price movements. The US Strategic Petroleum Reserve has reportedly fallen to its lowest level since 1982, highlighting the strain on emergency buffers.
Inflation is expected to remain elevated before moderating. The IMF maintains its outlook for global inflation at 4.7% in 2026, with a forecast of 4.1% for 2027, which is higher than the 3.9% projected in July. Advanced economies are expected to grow by 2.1% this year, up from 2.0% in 2025, but growth is forecast to slow to 1.9% next year.
US economic growth is projected to remain steady at 2.3% for both 2026 and 2027, with the 2027 figure revised up slightly from 2.2% in the previous update. Silvana Tenreyro, the IMF’s economic counsellor, urged policymakers to move beyond merely coping with shocks and focus on rebuilding fiscal space and supply-chain security.
Kristalina Georgieva, the IMF managing director, emphasized the urgency of addressing rising global debt levels, including borrowing related to AI infrastructure. “We cannot keep delaying necessary policy action – you have the tools, now have the wisdom to use them,” she said. The report highlights that while financial markets have remained largely calm, partly due to AI-related exuberance, the narrowing cushion of policy buffers requires immediate attention to prevent future destabilization.
