Artificial-intelligence investment and fiscal support have helped sustain demand, partly offsetting the effects of the Middle East war and higher energy costs.
The outlook assumes oil and gas shipments through the Strait of Hormuz resume by March 2027 and transport conditions return to their pre-war state by October. Gulf crude exports reached 88% of pre-conflict levels in September as shipping activity improved.
The recovery is uneven. South Korea’s growth is projected at 3. 3%, lifted by semiconductor demand.
The IMF said energy-importing economies outside the technology supply chain face higher import bills, weaker real incomes and less fiscal room.
The fund warned that the buffers supporting the expansion are shrinking. Public debt in advanced economies are projected to reach 115% of gross domestic product by 2031, up from 108% in 2025; debt in emerging and developing economies are forecast to rise to 84% from 74%.
A failure of expected AI productivity gains could trigger a market correction, including a potential 20% fall in U.S. The IMF also estimates about a 35% chance that global inflation exceeds 5% in 2027. It urged governments to rebuild fiscal space and keep assistance for households facing higher food and energy costs temporary, targeted and nondistortionary.