IMF Says AI Is Saving the Global Financial System from the Effects of War

The International Monetary Fund (IMF) has stated that artificial intelligence (AI) and strong corporate earnings have protected the global financial system from the worst effects of the Iran war. The assessment was made in the IMF’s July 2026 edition of the World Economic Outlook (WEO). The IMF forecasts global economic growth of 3% this year, down from a realised 3.5% in 2025, before rising to 3.4% in 2027. The projections are largely unchanged from the previous estimates released in April. “This moderate slowdown reflects the impact of the war in the Middle East, partially offset by demand-driven momentum in the global technology cycle thanks to advances in artificial intelligence and its adoption,” the IMF stated. “The impact varies widely depending on countries’ exposure to the war and their position in the technology value chain.” The IMF noted that more than 80% of S&P 500 companies exceeded their earnings forecasts in the first quarter of this year. According to the IMF, the concentration of equity markets in AI-related stocks, which was discussed in the institution’s previous financial stability report, continues to increase. The IMF observed that stock markets with significant AI exposure—Japan, Korea, Taiwan Province of China, China, and the United States—outperformed other markets in the second quarter of 2026. While AI is helping to protect the financial system, the IMF has previously highlighted risks from the technology. Pierre-Olivier Gourinchas, the IMF’s Chief Economist, said AI could trigger inflation not only by raising chip costs but also by making consumers feel wealthier and more willing to spend. “The AI investment boom is generating extraordinary valuations for companies in the US stock market and in countries like South Korea, creating a wealth effect that could add to price pressures,” Gourinchas said in an interview. Booming technology stocks are boosting retirement accounts and investment portfolios, making consumers feel richer and more inclined to spend on holidays, homes, and other big-ticket purchases. “These demand pressures, they generate inflation,” Gourinchas said.