Economic growth in India and major Southeast Asian countries is faster than previously expected this year, helped by AI and worldwide high-tech investments, the International Monetary Fund said in its latest forecast.
The global economy is expected to grow 3.1% this year and 3.4% in 2027, according to the IMF’s flagship World Economic Outlook report released Tuesday during its annual meeting in Bangkok. The global figure marks an upward revision from the July forecast of 3.0%, while the 2027 number was unchanged. The global economy expanded 3.5% in 2025.
“Activity in the first half of 2026 held up better than expected despite the dragging war in the Middle East and continuing strains from trade tension,” the IMF said in the report, explaining the revision.
India remained among the fastest-growing major economies, with growth forecast at 7.0% in 2026, up 0.6 percentage points from IMF’s July projection, supported by resilient domestic demand and a robust services sector.
The ASEAN-5 economies — those of Indonesia, Malaysia, the Philippines, Singapore and Thailand — are now projected to grow a collective 4.4% in 2026, up from 4.1% in the previous forecast. This is thanks to investments in data centers — a key infrastructure supporting the artificial intelligence boom — amid an upturn in the global technology cycle.
China, Asia’s largest economy, is expected to grow 4.5% in 2026, a 0.1 percentage-point downward revision and down from 5.0% in 2025, as higher global oil prices and prolonged uncertainty weigh on growth.
Strong investment in technology sectors, particularly AI, plays a key role in supporting the global economy, creating demand and pushing up exports in countries with high-tech investments, according to the report.
In contrast, countries with little connection to the technology value chain and that rely on energy imports faced higher costs, weaker real income and more constrained fiscal space, the IMF said.
“Many low-income and vulnerable countries belong to this latter group, increasing the risk that recent shocks will widen income gaps across and within countries,” the IMF said.
Global headline inflation is projected at 4.7% this year, up from 4.1% in 2025 due to higher energy and food prices.
Global inflation is projected to ease to 4.1% again in 2027. However, the IMF remains concerned that a prolonged stalemate or further escalation in the Middle East could keep energy and food prices high, adding inflationary pressure.
“Any governments’ support to ease the impact of higher energy and food prices should be temporary, targeted, non-distortionary and not jeopardize fiscal sustainability goals,” the IMF said.
