“The economy has been resilient, but that resilience is reaching its limits. The task ahead is to move from coping to rebuilding…”

—International Monetary Fund (IMF) Chief Economist Silvana Tenreyro, October 13, 2026

Key points

• According to the IMF, the global economic outlook is positive, but precarious with risks skewed to the downside.
• The forecast for ongoing global growth assumes energy and other commodity prices normalize, with inflation slowing next year.
• Growth forecasts reveal a bifurcated global economic landscape. Advanced tech hubs and energy exporters outside conflict zones are seeing resilient or expanding activity, while net energy importers lacking tech supply-chain ties face rising costs and weaker growth.

The International Monetary Fund’s October 2026 World Economic Outlook describes a global economy increasingly divided by two competing forces: negative geopolitical shocks and positive technological momentum.

According to the IMF, Canada’s economy is expected to grow by 1.1% this year and by 1.7% next year, broadly in line with our latest forecast of 0.9% in 2026 and 1.5% in 2027. Elevated energy prices are creating both lift (via stronger exports) and drag (via inflation and uncertainty).

Global growth is projected to decelerate from 3.5% in 2025 to 3.1% in 2026 before recovering slightly to 3.4% in 2027, but the real story revolves around the uneven and precarious nature of this growth.

Energy could squeeze harder

Energy prices have been elevated since the outbreak of war in the Middle East, but the negative impact on global economic growth has been kept in check by factors such as the drawdown of inventories, increased supply from non-Persian Gulf producers, and the assumption that the conflict will end soon. The IMF estimates that this year's global growth would be 2.5% instead of 3.1% if these factors were not in play.

The concern is that the buffers are wearing thin with oil inventories running low and conflicts adjacent to the Red Sea and Black Sea threatening to offset the supply increases. According to the IMF’s forecast, if energy flows do not normalize over the next year, the result will be even higher inflation and a much slower pace of global growth.

AI to the rescue…for now

While the global economy has proven resilient in the face of tariff headwinds and the energy squeeze, it is the boost from an unprecedented investment in AI that has kept it from slipping into a significant downturn, with high-tech exporters in Asia and major infrastructure hubs (primarily in the U.S. and China) driving the current expansion.

The IMF warns, however, that “the current technology tailwind could stop abruptly if expectations about AI-related profits and productivity gains are reassessed.” The IMF also points out that technology-related investment “is concentrating risks—making the global expansion heavily reliant on a small number of firms, sectors, and economies.”

Bifurcation

The IMF’s outlook points to a bifurcated global economy. Advanced tech hubs (e.g., Taiwan and South Korea) and energy exporters outside conflict zones (e.g., Nigeria and Canada) are seeing resilient or expanding activity, while net energy importers lacking tech supply-chain ties (e.g., Turkey, France, and the Philippines) face rising costs and weaker growth. Global growth now rests on a smaller base, with 32 countries accounting for 95% of global growth versus 54 in the IMF’s April forecast.

Another downside risk is presented by rising government deficits and debt combined with higher long-term borrowing costs and the potential need for more restrictive monetary policy to constrain inflation. The IMF’s Chief Economist, in turn, argues that countries with high debt and deficits need to “make sure that deficits and ultimately debt are on a downward trajectory.”

Don’t forget the potential upside

If the promised ROI from AI spending is realized in the form of rising productivity, the conflict in the Middle East deescalates in a sustained way, and trade disruptions ease, there is also significant potential upside to global growth.

Answer to the previous trivia question: In 1987, Aretha Franklin became the first woman to be inducted into the Rock and Roll Hall of Fame.

Today’s trivia question: Who was the first Canadian woman to win the Nobel Prize for literature?