IMF warns global shocks could widen rich-poor gap

The International Monetary Fund (IMF) has warned that prolonged conflict in the Middle East, elevated energy prices and technological disruptions could widen the economic gap between rich and poor countries, with import-dependent developing economies facing greater risks from rising costs and slower growth.

In its latest World Economic Outlook (WEO), released Tuesday in Bangkok, the IMF projected global economic growth of 3.1 percent in 2026 and 3.4 percent in 2027, but cautioned that the headline figures mask uneven performance across economies.

“A prolonged conflict in the Middle East could put additional pressures on inflation and slow down growth,” IMF chief economist Silvana Tenreyro said, warning that the global economy’s resilience was reaching its limits.

The IMF’s latest WEO put the Philippines’ growth forecast at 3.4 percent this year and 5.1 percent in 2027, unchanged from the forecasts presented on 25 September following the IMF’s Article IV Consultation Mission to the country, part of the organization’s annual consultations with member countries.

“The main external risks stem from a prolonged Middle East conflict, tighter global monetary conditions, and weaker remittances. Domestically, a weaker rebound in public investment and confidence and more frequent climate events would weigh on growth, while rising leverage and a prolonged property downturn pose financial stability risks,” said IMF Philippine mission leader Andrea Pescatori.

The October WEO said low-income countries that rely heavily on imported oil and lack competitive technology industries are particularly vulnerable to the latest economic shocks. The Philippines, which relies on oil imports passing through the Strait of Hormuz for 99 percent of its oil supply, has been cited by multiple international institutions as among the economies hardest hit by the oil shock.

In its latest regional economic outlook, the ASEAN+3 Macroeconomic Research Office (AMRO) said the growth outlook remains particularly sensitive to artificial intelligence-related demand, which presents both upside and downside risks. The IMF also highlighted risks associated with the AI investment boom.

“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 report said.

AMRO noted that the Philippines has captured a much smaller share of ASEAN’s role in the global AI supply chain. Regional peers such as Singapore and Malaysia, as well as Plus-3 economies such as Japan and China, received upward or unchanged growth forecast revisions amid their greater participation in the AI race.

Meanwhile, Danny Citrinowicz, a senior researcher at Tel Aviv University’s Institute for National Security Studies, said in August that supply chain disruptions caused by the conflict around the Strait of Hormuz could have consequences lasting months or even years after a potential peace deal between the United States and Iran.

“[T]here [is] not going to be a return to the 28th of February status quo. It's not going to happen,” he said.

“The Iranians have the basic interest of opening the Straits. The problem is that they want to do that while controlling the Straits themselves. So even if we have [a peace] agreement tomorrow, it will take time to sit back and forth in that regard,” he added.