The IMF predicts world economic growth of 3.1 percent this year.

The IMF published the October edition of the World Economic Outlook. The report stated that it reasserts the resilience of the global economy but this resilience is not equally distributed among countries and the opportunities for economies to adapt in the short term are rapidly narrowing. Despite the ongoing pressures from the war and trade tensions in the Middle East, the report reported that economic activity in the first half of 2026 proceeded better than expected, as the technology cycle driven by strong investments in artificial intelligence created a momentum that supported demand. The report indicated that global economic growth is expected to be 3.1% this year and 3.4% next year. The IMF had previously forecast global economic growth of 3% in 2026 and 3.4% in 2027 in its July estimates. In its April estimates, the fund had announced a global economic growth forecast of 3.1% for this year and 3.2% for next year. The report indicated that global headline inflation is expected to rise to 4.7% in 2026 due to the temporary effect of increases in energy and food prices, followed by a decline to 4.1% in 2027. The report, which suggested a slowdown in the growth of global trade volume in 2026 and a stabilization in 2027, indicated that the negative effect of tariffs, the process of adjustment in production chains, and the strong trend of trade connected to technology were effective in this outlook. The report stated that global imbalances are expected to decrease only moderately in the medium term, and the medium-term growth outlook remains weak compared to historical standards and continues to diverge among countries. The report warned that if a prolonged stalemate in the Middle East continues or tensions escalate further, energy and food prices will remain high and volatile, inflationary pressures will strengthen, fiscal and external balances will be disrupted, and growth will be suppressed, potentially leading to a downward trend for risks. In the report, which also shared economic growth forecasts for countries, it was reported that the growth expectation for the US economy, which is part of the group of advanced economies, remained at 2.3% for this year, rising to 2.3% for next year. The report noted that the growth forecast for the Eurozone economy was raised from 0.9% to 1.1% for this year, and the growth forecast for the region for next year remained at 1.2%. The report indicated that Germany's growth forecast was raised from 0.7% to 1.3% for this year, and from 1% to 1.1% for next year, while the growth expectation for the French economy was lowered from 0.6% to 0.4% for this year, and from 0.9% to 0.7% for next year. The report noted that the growth forecast for the Italian economy was raised from 0.5% to 0.8% for this year, and from 0.5% to 0.6% for next year, while the growth forecast for the Spanish economy was raised from 2.1% to 2.5% for this year, and remained at 1.8% for next year. The report indicated that the growth expectation for the UK economy was raised from 1% to 1.3% for this year, and lowered from 1.3% to 1.2% for next year, while the growth forecasts for the Canadian economy remained at 1.1% for this year and 1.7% for next year, and the growth forecast for the Japanese economy was raised from 0.6% to 0.7% for this year, remaining at 0.7% for next year. In the IMF's report, the growth expectation for the Chinese economy in the group of emerging markets and rising markets was lowered from 4.6% to 4.5% for this year and from 4.1% to 4% for next year. The report noted that the growth forecast for the Indian economy for this year was raised from 6.4% to 7%, and the forecast for next year was raised from 6.7% to 7%. The growth expectation for the Russian economy was lowered from 1.1% to 0.9% for this year and next year. The report indicated that the economic growth of Turkey is expected to be 2.7% this year and 3.6% next year. The IMF had previously forecast Turkish economic growth of 2.9% in 2026 and 3.6% in 2027 in its July estimates. The report expected inflation for Turkey to be 31.2% at the end of 2026 and 26.5% at the end of 2027. The IMF published the October 2026 edition of the Financial Stability Report, titled "Resilience, Risks, and Transformation," and the blog post "Below Resilience: Growing Risks, Unresolved Fragilities." In the article, it was stated that global financial markets have maintained their resilience with the support of strong economic growth and corporate profitability, and financial conditions have also been relatively favorable, but three main risks are increasing: market corrections due to artificial intelligence, sharp increases in government bond yields, and cyberattacks. The article pointed out that if these risks combine with existing fragilities in the financial system, they could create broader financial stress, emphasizing that high indebtedness, liquidity shortages, and strong links between markets could amplify the impact of potential shocks into wider financial pressure. The article noted that investments in artificial intelligence support global economic activities and that companies operating in this area have recorded strong profit increases. The article stated that if investments and profitability fall short of expectations, it could lead to a correction in asset prices related to the artificial intelligence sector, drawing attention to the fact that hyper-scale companies are increasingly borrowing more, and investors are increasing leverage to invest in artificial intelligence stocks. The article pointed out that cyclical financing agreements based on share and debt flows among companies in the artificial intelligence sector also pose a risk, noting that "our review of such 14 transactions since 2023 reveals that approximately 300 billion dollars in equity investment and 650 billion dollars in borrowing have been made in return for future revenue commitments of 1.4 trillion dollars." The article recalled the time when inflationary pressures caused by rising energy prices, fiscal concerns, and stronger-than-expected growth in some economies pushed up government bond yields. It indicated that the return to pre-global financial crisis levels for bond yields is likely, and that high fiscal imbalances and negative feedback loops linked to leveraged transactions in the bond markets pose a risk. The article drew attention to the increased dependence of investors sensitive to price changes on central banks reducing their balance sheets, and that the rise in government bond yields could reduce the value of other assets and the value of bonds used as collateral in financial transactions. It emphasized that the digitalization and increased interconnectedness of the financial sector have made cyberattacks an increasingly growing source of systemic risks, highlighting that a major attack could bring payment systems, trading operations, access to deposits, and other critical financial services to a standstill. The article noted the following: "If an attack targets a major financial institution, payment system, cloud provider, or software platform, this threat becomes even more apparent, paving the way for the disruption to spread to the entire financial system, which is increasingly integrated." In the article, it was highlighted that advanced artificial intelligence models can accelerate both attacks and defenses, given that over 70% of attacks in the year were made by exploiting security vulnerabilities, and software providers had almost no time to fix these vulnerabilities. The article stressed the importance of cyber resilience, incident reporting, crisis preparedness, and the oversight of critical third-party service providers. In the article, while the overall resilience of the global banking system is maintained, there are weak links, and it was noted that in an adverse stress scenario, the capital adequacy ratios of banks representing 22% of global banking assets could fall below legal limits, compared to 18% a year earlier. The article stressed that these banks' ties to non-bank financial intermediaries are deepening, creating additional channels for the spread of stress. It pointed out that non-bank financial institutions are turning to illiquid assets and derivatives and becoming more dependent on the same asset managers, which could further amplify financial shocks. The article stated that while bond yields are rising in emerging economies, and yield differentials remain relatively low compared to developed economies, global shocks are weakening these countries' buffers and increasing their external vulnerabilities. It emphasized that policymakers have a narrower margin for maneuvering to support the economy against potential shocks due to high public debt, emerging inflationary pressures, and rising borrowing costs compared to the past. In this context, it was noted that action is needed in three areas: putting public debt on a sustainable path, limiting imbalances and liquidity mismatches with leverage in the artificial intelligence, private credit, and other non-bank financial sectors, and strengthening cyber defense capabilities as priorities. The article stated that emerging economies also need to rebuild their economic buffers while financial conditions remain favorable, and that proactive policies are the best way to be prepared for potential shocks as risks increase. News from the Anadolu Agency is published by summarizing news provided to subscribers via the AA News Flow System (HAS). Please contact us for a subscription. Reach the Ombudsman Is there a mistake in this news? 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