The IMF said in a press briefing held today, October 13, in Bangkok, Thailand that while the Global Economy has been resilient, that resilience is under strain with the risks tilted to the downside.
“The global economy has been resilient, but that resilience is under strain with risks tilted to the downside. Global activity is projected to grow at 3.1% this year, 40 basis points lower than last year, and it’s forecast to rise by 3.4% in 2027. This is a net result of two key forces that are shaping the outlook.
First, the increase in the prices of energy and other commodities triggered by the war, which is akin to a negative global supply shock driving up prices and hampering activity. Second, the tech boom, mostly driven by AI, which acts as a positive demand shock, driving up both prices and activity, particularly trade and investment.” said Silvana Tenreyro, Economic counselor, chief economist and director of the Research Department, IMF.
Tenreyro also addressed El Niño and AI.
“Extreme weather events triggered by Al Nino could cause further disruption in commodity markets, exacerbating supply pressures. A second limit to resilience stems from the composition of growth. The AI related boom through investment and trade has been a key driver of global growth. But AI supply chains are highly concentrated in a few countries, sectors and firms, which creates potential chokepoints.
The third limit to resilience is fiscal. Higher borrowing costs and interest rate payments could crowd out critical spending in other areas and reduce fiscal buffers for future shocks.”
Before calling for decisive action to build financial buffers and to safeguard financial stability.
“This confluence of risks calls for decisive action. Fiscal policy must be restrained to contain demand pressures at a time of highly inflationary risks.
Countries with high debt and deficits need to initiate a fiscal consolidation and make sure that deficits, and ultimately debt, are on a downward trajectory. Any support measure, if needed, should be temporary and targeted to protect the most vulnerable while preserving price signals. More than ever, central bank independence is vital in achieving inflation targets.
Countries should continue to build fiscal buffers, safeguard financial stability, enhance private sector dynamism and strengthen supply side resilience.”
To watch the full briefing, click here: World Economic Outlook Press Briefing | October 2026
