The International Monetary Fund on Tuesday slightly upgraded its outlook for the world economy for this year, while warning of growing risks from rising debt, including the financial frenzy around artificial intelligence.The IMF says it expects the global economy to grow at a 3.1 per cent pace this year. That’s up from its July forecast for 3.0 per cent growth and well below the 3.5 per cent expansion in 2025. Growth in 2027 should rebound to 3.4 per cent, it said in its latest Economic Outlook.

The report, released as world economic and financial leaders gathered in Bangkok for the fall meetings of the IMF and World Bank, predicts that growth in the United States will remain steady at 2.3 per cent in 2026 and 2027.Collectively, advanced economies will grow 2.1 per cent this year, up from 2.0 per cent in 2025, and then slow to 1.9 per cent growth next year, it said.The forecasts are based on a nearly 41 per cent increase in oil prices this year, at an average of $96 a barrel. Global inflation is foreseen at 4.7 per cent in 2026, falling to 4.1 per cent next year. They also are based on the assumption that shipments of oil and gas through the Strait of Hormuz will resume by March, and that the boom in AI demand will moderate.The boom in artificial intelligence is offsetting damage from sharply higher prices for oil and gas, IMF economists say, but it also carries risks.

Its benefits are not shared equally: the U.S. and China account for more than three-quarters of net demand for imports of computer chips and other AI-related equipment, the report said.“The outlook is highly uneven,” Silvana Tenreyro, the IMF’s director of research, told reporters in Bangkok.Growth is increasingly concentrated, with 32 countries accounting for 95 per cent of global growth, the report said. That compares with 54 countries as of April.“The global economy is not simply slowing or accelerating; rather, growth is being reallocated across countries according to their exposure to the war-induced supply shock and AI-related demand strength,” it says.Athanasios Vamvakidis, deputy director at the IMF’s Monetary and Capital Markets Department, said an AI-related correction in stock markets is just one of the risks. Rising bond yields are another evolving problem, along with cyberthreats that could disrupt financial systems, he said.Underscoring such concerns, sell-offs of AI-related shares swept through Asia on Tuesday, with South Korea’s Kospi sinking as much as 7 per cent before it closed 5.5 per cent lower.AI’s effects on employment are another worry, “a slow moving tsunami, but a tsunami nonetheless,” IMF Managing Director Kristalina Georgieva said.“The impact over time on jobs globally we estimate to be around 40 per cent — jobs either augmented or downgraded or eliminated. And we are already seeing some of this impact,” she said.

The IMF chief is urging countries to do a better job of improving their national finances and taming mounting levels of debt.That’s especially crucial at a time of high borrowing costs, Tenreyro said.Countries that are somewhat insulated from the energy shocks of the Iran war and that are benefiting from rapid adoption of AI are managing to keep growth on track. But developing economies and emerging markets more vulnerable to higher costs for oil and gas will see growth slow to 3.7 per cent this year from 4.5 per cent in 2025, the report says. It forecasts they will regain momentum next year, expanding at a 4.4 per cent annual pace.

The situation is much worse in the Middle East and Central Asia, where those regions’ economies are expected to contract this year before recovering to a 6.3 per cent rate of growth in 2027.The 21 European countries that share the euro currency are expected to grow by a meager 1.1 per cent this year and 1.2 per cent in 2027.China, the world’s No. 2 economy, is expected to expand 4.5 per cent this year, down from 5 per cent in 2025, in line with the government’s official target.India is once again forecast to be the world’s fastest-growing major economy, advancing at a 7 per cent clip, down from a sizzling 7.7 per cent last year.The IMF is a 191-nation lending organization that works to promote economic growth and financial stability and to reduce global poverty. At the meetings in Bangkok, finance ministers and central bank governors will assess the state of the world economy and discuss strategies to support financial stability and sustained growth.