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From Uche Usim, Bangkok
The International Monetary Fund (IMF) has projected global economic growth of 3.1 per cent this year but warned that rising energy and commodity prices, mounting public debt and uncertainties surrounding artificial intelligence (AI) are putting the world economy under pressure.
The Fund said global growth was expected to rise to 3.4 per cent in 2027, but warned that risks remained tilted to the downside, with further disruptions capable of weakening economic activity and pushing inflation higher.
Presenting the October 2026 World Economic Outlook at the IMF/World Bank Annual Meetings in Bangkok, Thailand, the Fund’s Economic Counsellor and Director of Research, Sylvana Tenreyro, said the global economy had remained resilient but was facing growing challenges.
She attributed the outlook to two major developments of rising energy and commodity prices, which are weighing on economic activity, and investment in artificial intelligence and related technologies, which has continued to support growth.
On inflation, Tenreyro said global headline inflation was projected to rise from 4.7 per cent to 5.1 per cent in the near term before declining to around three per cent in 2026, according to the report’s projections.
She, however, warned that higher food prices were adding to cost-of-living pressures, particularly for households already struggling with rising expenses.
The IMF said the economic recovery remained uneven across countries, with some benefiting from investment in AI while low-income countries and fragile economies faced more difficult conditions.
Tenreyro said rising prices of crude oil, gas, metals, fertilisers and other commodities had increased production and transportation costs, putting additional pressure on businesses and household budgets.
Although some countries had managed to adjust by redirecting supplies, increasing production or finding alternative sources, she said the effects of the disruptions remained uneven.
Countries with limited financial resources and heavy dependence on imported energy and food were particularly vulnerable, she added.
The IMF also raised concerns about the concentration of AI-related investment in a relatively small number of companies and sectors.
While the technology boom has supported investment, trade and economic activity, Tenreyro warned that markets could suffer a correction if expectations about future productivity gains and profits proved too optimistic.
Such a correction could affect investment, tighten financial conditions and slow growth beyond the technology industry.
She urged policymakers to monitor developments in the sector and remain alert to emerging threats to financial stability.
On public finances, the IMF warned that higher borrowing costs and debt-servicing obligations could leave governments with fewer resources for infrastructure, social services and investment in renewable energy.
It said sustained pressure from commodity prices could worsen fiscal vulnerabilities, weaken growth and increase inflation.
The Fund called on governments to address excessive deficits, strengthen public finances and direct spending towards productive and essential areas.
However, it cautioned that fiscal adjustments should be carefully designed to limit hardship, protect vulnerable groups and avoid undermining economic recovery.
Where government support was necessary, the IMF said it should be targeted, temporary and consistent with medium-term fiscal sustainability.
It also urged countries to rebuild financial buffers to improve their ability to respond to future economic shocks.
On monetary policy, Tenreyro said central banks must remain focused on price stability and bringing inflation back to target, while taking account of differences in inflation, labour-market conditions and countries’ exposure to commodity-price shocks and technology-related risks.
She stressed that central bank independence was vital to achieving inflation targets and supporting sustainable economic growth.
According to her, credible monetary policy frameworks and clear communication would help keep inflation expectations under control and strengthen confidence in economic management.
The IMF further urged governments to safeguard financial stability, encourage private-sector investment and strengthen supply chains to reduce vulnerability to future disruptions.
Tenreyro said countries needed to move beyond simply coping with economic shocks to rebuilding their capacity to withstand them.
“The global economy has been resilient, but that resilience is reaching its limits,” she said.
She added that restoring fiscal space, strengthening supply-side resilience and improving countries’ ability to withstand disruptions were necessary to secure more sustainable growth.
The report’s central message, she said, was that governments must make urgent policy choices to preserve economic stability and prepare their economies for future shocks.
