IMF warns AI investment pullback, Middle East war and debt could hit global growth

The International Monetary Fund on Tuesday, 13 October, flagged major growth and financial-stability risks from a possible end to the AI investment boom, rising public debt and a prolonged Middle East conflict, Reuters reported from the IMF–World Bank meetings in Bangkok.

Baseline forecast

• Global growth is put at 3.1% in 2026 (up slightly from 3.0% in July) and 3.4% in 2027, as AI infrastructure spending offsets higher oil prices from the Middle East war.
• The 2027 outlook assumes the Strait of Hormuz reopens by March and shipping normalises by October 2027.
• A deeper war that kept oil above $130 through the first quarter of 2027 would cut next year’s growth by 0.5 percentage point.

AI correction scenario

If disappointment over AI productivity or profits triggered a sharp fall in investment and asset prices, global GDP could be 1.1% lower by 2028, including a 1.8% hit to US output, the World Economic Outlook said. Trade in AI goods grew 29% between 2023 and 2025, versus 8.3% for overall trade; without AI, trade growth would have been only 4.6%, chief economist Silvana Tenreyro said.

IMF officials urged policymakers not to be “complacent.” Managing Director Kristalina Georgieva said resilience should not be taken for granted. Officials also stressed elevated debt and bond yields as fiscal risks; the Fund praised Britain for setting out clear borrowing-reduction plans while urging other major economies to consolidate.