IMF Raises Forecast for World Growth   10/13 06:20

   

   BANGKOK (AP) -- 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% pace this year. 
That's up from its July forecast for 3.0% growth and well below the 3.5% 
expansion in 2025. Growth in 2027 should rebound to 3.4%, 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% in 2026 and 2027.

   Collectively, advanced economies will grow 2.1% this year, up from 2.0% in 
2025, and then slow to 1.9% growth next year, it said.

   The forecasts are based on a nearly 41% increase in oil prices this year, at 
an average of $96 a barrel. Global inflation is foreseen at 4.7% in 2026, 
falling to 4.1% 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.

   AI has uneven impacts 

   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% 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% before it 
closed 5.5% 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% -- jobs 
either augmented or downgraded or eliminated. And we are already seeing some of 
this impact," she said.

   Debt remains a key concern for regional economies 

   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% this year from 4.5% 
in 2025, the report says. It forecasts they will regain momentum next year, 
expanding at a 4.4% 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% rate of growth in 2027.

   The 21 European countries that share the euro currency are expected to grow 
by a meager 1.1% this year and 1.2% in 2027.

   China, the world's No. 2 economy, is expected to expand 4.5% this year, down 
from 5% 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% clip, down from a sizzling 7.7% 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.