The International Monetary Fund’s (IMF) October World Economic Outlook says economic activity remained stronger than expected during the first half of 2026, supported partly by investment in artificial intelligence.
However, the benefits are unevenly distributed. Countries involved in artificial intelligence (AI) supply chains or exporting energy have performed better, while energy-importing and low-income economies face higher costs, weaker demand and limited fiscal space.
Sub-Saharan Africa is expected to grow by 4.5% in both 2026 and 2027. Nigeria’s growth is projected at 4.2% in 2026 and 4.3% in 2027, while SA’s economy is forecast to expand by 1% and 1.3%, respectively.
The IMF expects global inflation to increase from 4.1% in 2025 to 4.7% in 2026 before declining to 4.1% in 2027.
Higher energy, fertiliser, food, transport and insurance costs are driving price pressures. Average oil prices are projected at almost $96 a barrel in 2026, about 41% higher than in 2025.
The IMF warned that prolonged Middle East conflict, cyberattacks, extreme weather and further trade restrictions could weaken growth and intensify inflation.
A reassessment of expected AI profits and productivity gains could also reduce investment sharply, trigger market corrections and tighten financial conditions.
Public debt remains a major vulnerability. Debt is projected to increase from 108% of gross domestic product in advanced economies in 2025 to 115% by 2031. Emerging and developing economies could record an increase from 74% to 84%.
The IMF called for credible fiscal consolidation, stronger tax administration and more efficient spending while protecting infrastructure, skills development and vulnerable households.
Temporary and targeted cash transfers were identified as the most efficient response to sharp food and energy price increases.
Broad subsidies and price controls could require between three and 22 times more public financing to provide comparable assistance.
The IMF also urged countries to strengthen renewable energy, electricity grids, digital infrastructure and workforce skills.
International cooperation remained essential because conflict, commodity shocks, displacement, debt and technological change crossed national borders, the Report said.
–IMF/ChannelAfrica–
