The International Monetary Fund headquarters in Washington, D.C. (Image: APK / Wikimedia Commons — CC BY 4.0)
The International Monetary Fund delivered a double message in Bangkok this week: the global economy is holding up better than expected, but the two forces propping it up — the artificial intelligence boom and cheap energy — could both turn into its biggest dangers.
At the IMF and World Bank annual meetings, the fund raised its global growth forecast to 3.1% for 2026, up slightly from the 3.0% it projected in July. Growth of 3.4% is expected in 2027. Yet both figures sit well below historical averages, and the IMF's latest World Economic Outlook flagged "significant growth and financial stability risks" from three sources: a potential end of the AI investment boom, growing debt levels, and the prolonged Middle East conflict.
"Without the U.S.-Israeli-led war against Iran and Tehran's closure of the Strait of Hormuz, which triggered a massive global energy shock, the IMF has said it would have expected AI to have fueled much stronger growth," Reuters reported from the meetings.
IMF chief Kristalina Georgieva, the first IMF chief from an emerging-market economy, used her Friday plenary address to plead for cooperation. "The need of the hour is for urgent and practical international cooperation," she said, warning that the sheer speed of technological change, disruptions to the trading system, high food and energy prices, and lingering wars all threatened to widen the gulf between advanced economies and the world's poor. She told a subsequent panel she spent "sleepless nights" worrying about how to regulate AI and ensure poorer countries aren't left behind.
The AI warning was the week's dominant theme. Georgieva said AI's risks may exceed its opportunities without adequate safeguards and an ethical foundation, likening unregulated AI development to Formula One race cars "careening around with no barriers to protect the audience." An IMF report projected that a decline in AI investment could reduce global GDP by 0.4% by 2028 — a warning that lands just as AI stocks wobble and bond markets flash red. U.S., German, and Japanese 10-year sovereign yields have reached their highest levels in decades, Georgieva noted.
Still, the fund acknowledged how much AI has carried the world economy. Propelled by spending on data centers and microchips, AI cushioned the shock of rising energy prices from the Middle East war. IMF chief economist Silvana Tenreyro noted global trade rose 8.3% between 2023 and 2025 — a figure she said would be closer to 4.6% without AI-related products.
"If there is loss of confidence and money runs away from AI, that can lead to financial stability risks," Georgieva told AFP.
Federal Reserve Chair Kevin Warsh, also in Bangkok, called AI "the most consequential change" to the global economy in his lifetime with "a huge benefit" — but warned "the path from where we are to there is likely to be a very bumpy one." Bank of Canada Governor Tiff Macklem put it more simply: AI "is everywhere in the global economy. You see it in GDP. You see it in the stock market. You see it in the bond market."
The IMF's report also painted a fragile energy picture: global oil reserves are being drawn down by about 2.7 million barrels a day, the fund estimates the Strait of Hormuz reopens only in March 2027 with pre-war shipping conditions returning by October 2027, and growth is becoming sharply unequal — just 32 economies now account for 95% of global expansion, down from 54 in April. Inflation is expected to stay elevated at 4.7% this year before easing to 4.1% next.
Washington, meanwhile, offered a sunnier read. U.S. officials at the meetings hailed what they described as American-led economic momentum — a contrast with the IMF's caution that will be tested by every oil price spike and every wobble in the AI trade.