Bulgarian economist, IMF managing director
The IMF has raised its 2026 global growth forecast but warns a bifurcated global economy risks deepening inequality as AI-driven growth coexists with energy shocks from the Iran war. Advanced economies are buoyed by AI investment, while energy-importing and low-income countries face higher costs and constrained fiscal space.
Global central banks face renewed pressure as governments squeeze independence to manage debt, raising inflation risks and market volatility. Jackson Hole gathers policymakers amid debates on inflation, debt, and the boundary between fiscal and monetary power.
Brent crude has climbed toward $97 a barrel after renewed exchanges of strikes between the United States and Iran over the past week. US strikes have hit sites along Iran's southern coast while Iran has attacked US-linked vessels and bases in the region; shipping through the Strait of Hormuz remains constrained and US pump and diesel prices have risen.
Oil prices have fallen after data showed Asia is set to import its highest monthly crude volume since the US–Iran war began, while traders continue to monitor UN‑level diplomacy and regional tensions. Brent has slipped near $102 a barrel and U.S. crude is trading in the low $90s as markets weigh rising Asian flows against Middle East risks.
The UK has borrowed £18.3bn in August, the ONS has reported, topping City and OBR forecasts and leaving year‑to‑date borrowing at £77.3bn — £8.1bn above the OBR projection. Rising gilt yields have pushed debt interest to record August levels and are narrowing Chancellor John Healey’s fiscal headroom ahead of the 28 October Budget.
The OECD has updated its global forecast, predicting UK growth of 1.1% in 2026 and 1% in 2027, with inflation easing to about 3.1% this year. It cautions that energy shocks from the Middle East war and higher fuel prices could lift inflation and slow growth next year, though the UK shows resilience in domestic demand.
Oil prices hover near $100 per barrel as Saudi Arabia, Iran and Yemen-linked attacks fuel supply concerns. Jurisdictional diplomacy is ongoing with talks at the UN and US-Chinese discussions shaping the market outlook. Analysts say supply routes remain vulnerable while diplomatic efforts seek de-escalation.
Global growth is being driven by an AI investment boom, but benefits are uneven. The IMF notes inflationary pressures from AI, energy, and debt, with a two-front dynamic: an energy shock and a demand surge from new tech. Debt levels remain near historic highs as policymakers contend with funding needs.