The International Monetary Fund (IMF) lowered its forecast for global economic growth this year. While increased investment in artificial intelligence (AI) is supporting growth, trade conflicts and geopolitical tensions persist, adding to uncertainty around the global growth outlook.
On the 8th (local time), Reuters said the IMF, in a released update to its World Economic Outlook (WEO), set this year's global growth forecast at 3.0%, down 0.1 percentage point (p) from April. It also projected next year's global growth at 3.4%.
The IMF said the global economy is holding up without larger-than-expected shocks, but risks to the growth outlook remain. It said the expansion of protectionism and moves to reorganize supply chains could weigh on global trade and growth prospects.
In particular, energy-market instability stemming from geopolitical conflicts—such as U.S.-Iran military tensions over the Middle East—is cited as a major risk factor. The IMF warned that if geopolitical instability intensifies, including heightened tensions in the Middle East, energy prices could rise and supply chains could be disrupted, and it could also lead to increased financial-market volatility. It said if international oil prices rise again, easing inflationary pressure could build, adding to the burden on each country's Central Bank efforts to stabilize prices.
Amid these conditions, the expansion of AI investment is seen as a factor partially mitigating the slowdown in global growth. However, the IMF noted that if expectations for AI technologies become overly elevated, asset price corrections and increased financial-market volatility could follow. This means that if the impact of AI investment fails to translate into actual productivity gains, the gap between market expectations and reality could widen.
The IMF said uncertainty around the global outlook remains high. If AI diffusion leads to productivity gains, it could lift the growth rate, but if military tensions originating in the Middle East, trade conflicts, and potential AI-related asset price corrections coincide, they could act as constraints on the trajectory of global growth.