By Akani Nkuna and Thebe Mabanga
The International Monetary Fund (IMF) has warned that growing investment in artificial intelligence (AI) could widen economic inequality, with countries able to invest in semiconductors and data centres at scale enjoying a distinct advantage.
In its latest World Economic Outlook report, released on Tuesday, the IMF projected a slowdown in global economic growth from 3.5% in 2025 to 3.1% this year, before recovering to 3.4% in 2027.
It also lowered South Africa’s growth outlook to 1.0% for 2026, down from the 1.1% projected in July, while forecasting a modest recovery to 1.3% in 2027.
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The Fund said the global economy had remained resilient despite the war in the Middle East, which has disrupted energy supplies and pushed up prices. The economic impact has differed significantly between countries.
The IMF said that just 32 economies now account for 95% of global growth, compared with 54 in April this year, highlighting how economic activity is becoming increasingly concentrated.
Countries benefiting from AI investment and technology exports are performing better than economies heavily dependent on imported energy, particularly those with limited involvement in the technology industry.
The IMF identified geopolitics and technology as two major forces transforming the global economy, warning that the prolonged conflict in the Middle East could deepen existing economic disparities.
It said uncertainty was likely to persist into next year, with its economic projections assuming that the reopening of the Strait of Hormuz, a critical route for global oil supplies, would resume in March 2027.
Pre-war conditions are assumed to return broadly by October 2027, although these dates are forecasting assumptions rather than predictions.
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“This assumption implies a gradual restoration of production, shipping, insurance, and payment arrangements rather than immediate normalization of energy flows,” the IMF said.
The Fund warned that current measures to mitigate energy shortages, including drawing down reserves, expanding alternative shipping routes and increasing production outside the conflict zone, could eventually reach their limits.
“Severe shortages would generally be avoided through further inventory drawdowns, expanded use of alternative routes, and some additional supply from producers outside the conflict zone, but shortages are assumed to arise in some emerging market and developing economies that do not have stocks available and encounter strong competition from wealthier counterparts for available cargoes,” the report stated.
The IMF also highlighted threats to oil infrastructure and shipping routes, including attacks by Iran-backed Houthi rebels, which have added to concerns about international energy supplies.
Global inflation is projected to rise from 4.1% in 2025 to 4.7% this year, mainly because of higher energy and food prices, before easing to 4.1% in 2027.
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Meanwhile, the IMF warned that investment in AI was contributing to inflationary pressures and exposing vulnerabilities in the financial system, raising concerns about its broader economic implications.
“While supporting activity, the AI investment boom is contributing to inflationary pressures and financial fragility. This is a large, front-loaded demand shock exposing capacity constraints in several sectors at once,” the Fund stated.
It highlighted that spending on semiconductors, data centres, cloud infrastructure, electricity generation, cooling systems and specialised property was increasing demand for construction services, land, energy and skilled labour before widespread productivity gains had materialised.
Moreover, the Fund described technology investment as a “positive demand shock” at a time when geopolitical conflicts continue to suppress economic activity and disrupt international trade.
Expectations of high profitability from AI-powered technologies have attracted significant private-sector investment, helping support global growth despite the ongoing energy crisis.
It warned, however, that the technology boom could slow abruptly if investors reassess expectations about AI profitability and productivity gains.
Such a reversal could reduce investment, trigger financial market corrections and tighten financial conditions, placing further pressure on economic growth.
“The constellation of accommodative financial conditions, robust private sector adjustment, and AI-related investment could carry activity through the war shock and begin to lift productivity,” the IMF said.
It also forecast unequal benefits from AI across the globe, emphasising that only a few economies can manufacture advanced semiconductors at scale and are therefore positioned to benefit most from growing demand.
As a result, the construction of data centres and the training and operation of advanced AI models remain highly concentrated in a small number of countries.
According to the IMF, China and the United States accounted for more than 75% of net imports of AI-related computing hardware in 2025 and a combined 57% of newly built data centres since 2024.
Taiwan and South Korea also play a significant role in the industry, accounting for 62% of net trade in AI-related computing hardware.
The concentration of technological infrastructure raises concerns that poorer economies could fall further behind as wealthier countries attract a greater share of investment and economic opportunities.
The report also noted that disruptions in energy markets could undermine AI-led growth, as data centres and other computing infrastructure require substantial electricity supplies.
The IMF cautioned that countries would need to strengthen energy security, develop technological infrastructure and improve their readiness to adopt AI to ensure that the economic benefits of innovation are more widely shared.
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