IMF lifts world growth to 3.1%, but just 32 countries now produce 95% of it

The International Monetary Fund has raised its forecast for the world economy, and nearly all of the improvement traces back to one source: the money companies are pouring into artificial intelligence. Look past that headline and the fund’s new World Economic Outlook describes a shrinking club of countries pulling away while a growing share of everyone else gets marked down.

That split matters more to a household than the global average does. The countries that build chips, servers and data centers, or supply their parts, are collecting the growth. Energy importers outside that chain are absorbing the oil shock instead, and the IMF expects prices to keep rising faster than central banks would like for longer. For a worker in a country with no part in the AI supply chain, the upgrade may never reach a paycheck.

The fund now sees global growth of 3.1% this year, up from the 3.0% it projected in July but below last year’s 3.5%, and it holds next year at 3.4%. Behind that figure, just 32 economies now produce 95% of global growth, down from 54 in the spring forecast. Since then the IMF has cut its outlook for 47% of the economies it covers, many of them energy importers with no foothold in AI hardware. The United States and China alone make up more than three-quarters of net import demand for chips and other AI equipment, according to the report.

The country map follows the money. US growth holds at 2.3% this year and next. China slips to 4.5%, and India is lifted to 7.0%, still the fastest-growing major economy. The euro area rises to 1.1% from 0.9%, which the IMF credits to resilience in Germany, Italy and Spain. Emerging and developing economies slow to 3.7% from 4.5% last year, while hardware suppliers such as Mexico, South Korea, Malaysia and Thailand ride the AI orders. The Middle East and Central Asia region, where shipping through the Strait of Hormuz has been cut off, is expected to shrink this year.

Prices are where the outlook lands for everyone else. The IMF projects global inflation of 4.7% this year, easing only to 4.1% next year, and assumes oil averages $96 a barrel this year and $87 next, up from the $89 and $78 it pencilled in three months ago. Expensive fuel feeds into transport, food and heating bills, and stubborn inflation leaves central banks less room to cut the rates that set mortgage and credit-card costs.

The forecast also rests on assumptions that could break. The base case has the Strait of Hormuz reopening by March 2027 and AI demand cooling gently. With oil at $130 through the first quarter of 2027, growth would lose 0.5 percentage points next year and inflation would reach 5.2%. A sharp reassessment of AI profitability, with investment and asset prices falling together, would leave world output 1.1% lower by 2028 and US output 1.8% lower. The cushions that softened the oil shock, from drawn-down reserves to switched suppliers, are wearing thin too. Petya Koeva Brooks, the fund’s deputy research director, told Reuters that growth would have dropped to 2.5% this year without them.

Workers and governments sit on the other side of the ledger. Managing Director Kristalina Georgieva called AI’s effect on employment “a slow moving tsunami, but a tsunami nonetheless,” with around 40% of jobs worldwide set to be augmented, downgraded or eliminated over time. She urged governments to cut debt while borrowing costs are high. Silvana Tenreyro, the former Bank of England rate-setter who became the IMF’s chief economist in August, put it plainly to reporters on her first outlook: “The outlook is highly uneven.”

The forecasts opened the IMF and World Bank Annual Meetings in Bangkok, which run until October 18. The full report, titled Resilience under Strain, Urgent Choices, was released on October 13, and the fund normally revises its numbers in a January update.

For the economies wired into the AI supply chain, the boom shows up in the forecast. Everywhere else, the first thing households will feel is the price of a $96 barrel.

Tags: artificial intelligence, inflation, oil prices, IMF, Kristalina Georgieva, World Economic Outlook