Low-income countries that import oil and aren’t benefiting from the artificial-intelligence investment boom face the greatest exposure to the Iran war’s economic shocks, the International Monetary Fund said Tuesday. The IMF expects developing economies and emerging markets to grow 3.7% in 2026, down from 4.5% in 2025, as higher energy costs squeeze economies and household budgets.
Growth Gains, Unevenly Shared
The IMF lifted its 2026 forecast for global economic growth slightly, to 3.1% from 3.0% in July. The world economy expanded at an annual pace of 3.5% in 2025. The fund expects growth to slow in 2027.
Advanced economies are forecast to grow 2.1% in 2026, up from 2.0% in 2025, before slowing to 1.9% in 2027. The United States is expected to grow 2.3% in both 2026 and 2027. The 21 countries that share the euro currency are forecast to grow 1.1% in 2026 and 1.2% in 2027.
Growth is becoming more concentrated across countries, the report said. Thirty-two countries accounted for 95% of global growth, compared with 54 countries in April. The United States and China accounted for more than three-quarters of net demand for imports of computer chips and other AI-related equipment. “The outlook is highly uneven,” Silvana Tenreyro, the IMF’s director of research, told reporters in Bangkok.
The report said countries’ exposure to the war-related supply shock and demand for AI were shifting where growth went. China is forecast to grow 4.5% in 2026, down from 5% in 2025. India is forecast to grow 7%, compared with 7.7% in 2025, making it the fastest-growing major economy.
Energy Bills and Public Choices
The IMF expects oil prices to rise nearly 41% in 2026, reaching an average of $96 a barrel. It forecasts global inflation of 4.7%, up from 4.1% in 2025. Those forecasts assume oil and gas shipments through the Strait of Hormuz resume by March and AI demand moderates.
Petya Koeva Brooks, deputy director of the IMF Research Department, said heavily indebted oil-importing countries faced difficult choices as they helped citizens through the energy shock. “Unfortunately, after years of the global economy being hit by shock after shock, debt levels have increased quite a lot, and at the same time, inflation has become a problem,” she said.
“For those countries that are most vulnerable, this is where the consumption basket is heavily weighted towards energy and food, and so indeed it is much much more difficult,” Koeva Brooks said. “But unfortunately there is no other choice.”
The IMF urged governments to offer narrow, targeted subsidies while rebuilding fiscal buffers and addressing rising debt. Koeva Brooks said many low-income countries faced debt distress or came close to it, and should seek debt restructuring if they couldn’t address the problem. “Where debt is not sustainable, then resolving that debt and having orderly and timely restructuring is always better than waiting,” she said.
AI Jobs and the Downside Risk
IMF Managing Director Kristalina Georgieva described AI’s employment effects as “a slow moving tsunami, but tsunami nonetheless.” She said the IMF estimated that around 40% of jobs globally would be augmented, downgraded or eliminated over time, and that some effects were already visible.
A slowdown in AI investment would hurt output in advanced economies and, through trade links, in Asia, the IMF warned. In its worst-case scenario, if AI failed to deliver promised productivity gains, global GDP forecasts for 2028 would fall by as much as 0.4%.
Climate-related risks also featured in the outlook. Koeva Brooks said higher prices for certain food items already reflected some effects of a particularly intense El Niño. “We have a significant increase in beverage prices, in the prices of rice, and so on,” she said. “Of course, it could turn out that the domino effect is even bigger than what we currently have.”
Economic and financial leaders gathered in Bangkok for the fall meetings of the IMF and World Bank. The IMF, a 191-nation lending organization, said finance ministers and central bank governors would assess the world economy and discuss financial stability and sustained growth.