The International Monetary Fund (IMF) says that the rise of artificial intelligence (AI) is not yet enough to fully offset the consequences of the war in the Middle East.
On July 8, the IMF again lowered its global economic growth forecasts for 2026. The organization states that the rise of artificial intelligence (AI) is not yet enough to fully offset the consequences of the war in the Middle East.
The IMF projects global economic growth of 3.0% this year, down from 3.1% in its April forecasts. These latest forecasts come ahead of the resumption of fighting between the United States and Iran in the past few hours.
It is the second time this year that the IMF has revised downward its global growth forecasts. These forecasts also mark a slowdown relative to the growth rate projected for 2025. Meanwhile, global inflation is expected to accelerate to 4.7% this year, a level higher than previous forecasts.
Nevertheless, the overall slowdown in growth has remained modest, as the AI demand dynamics partly offsetting the impact of the war. The IMF expects a global growth rebound in 2027, to 3.4%.
The IMF also noted that the repercussions of the war vary considerably from region to region. According to the organization, energy-exporting countries outside the conflict zone will benefit from favorable trading conditions.
At the same time, economies participating in growth driven by technology will experience stronger economic activity, even if they are energy-importing. Conversely, economic activity will slow in energy-importing countries less involved in the technology value chain. Although the global economy has so far withstood the shock of the war better than initially feared, the IMF warns that the global picture masks wide disparities across countries.
More precisely, gasoline prices at the pump rose by up to 30% in emerging Asian economies following the outbreak of hostilities, while the increase in Latin America was only 15%. While the American economy is still expected to grow by 2.3% this year, growth forecasts for the Middle East and Central Asia have been revised downward by 1.2 percentage points, to 0.7%.
The euro area is expected to grow by 0.9% this year, a forecast revised downward. France’s growth is estimated at 0.6%, 0.3 percentage points lower than expected. By contrast, growth in the world’s second-largest economy, China, has been slightly revised upward to 4.6%.
However, the IMF stressed that the total impact of the trade war is not yet known. The release of strategic petroleum reserves has helped ease downward pressure on dwindling energy supplies, but significant challenges may still lie ahead.
