The International Monetary Fund has identified the energy crisis sparked by the Middle East war as the single greatest risk facing the global economy heading into next year.
The fund projects global growth of 3.4% next year, offering a cautiously optimistic baseline even as geopolitical pressures continue to weigh heavily on energy markets and broader economic conditions.
Soaring energy commodity prices driven by the conflict have fueled inflation across multiple economies, with the effects spreading well beyond the immediate region into global supply chains and consumer costs.
Government interventions have helped limit the worst outcomes, with IMF deputy research director Petya Koeva Brooks telling Reuters that measures such as oil reserve draws and supplier diversification have made a meaningful difference.
Brooks also noted that demand destruction resulting from elevated energy prices has played a role in containing some of the inflationary pressure that would otherwise have compounded the crisis further.
Despite those stabilizing forces, the IMF struck a cautious tone about the durability of global resilience, with chief economist Silvana Tenreyro stating plainly that the world must shift its approach.
“The global economy has been resilient, but that resilience is reaching its limits, so we need to move from just coping to rebuilding,” Tenreyro told the media, as quoted by Reuters.
Artificial intelligence investment has emerged as a significant counterweight to these risks, with the IMF highlighting countries active in the AI space as having a stronger economic outlook than those on the sidelines.
The fund specifically named South Korea, Malaysia, Thailand, and Mexico as beneficiaries of their involvement in AI hardware development, pointing to that sector as a meaningful driver of economic momentum.
The United States and European Union economies are also expected to receive support from AI exposure, according to the IMF, positioning technology investment as a structural buffer against broader macroeconomic headwinds.
The picture is considerably darker for energy-dependent economies bearing the brunt of the current crisis, with Saudi Arabia now projected to record a GDP contraction of 3.3% this year.
That figure represents a severe downgrade from the IMF’s earlier forecast, which had anticipated growth of 1.7% for the kingdom, underscoring just how dramatically the conflict has shifted economic trajectories across the region.
