IMF Warns Middle East Wars and AI Boom Are Widening the Global Wealth Gap

The International Monetary Fund warned on Tuesday that wars across the Middle East are deepening global inequality. The fund released its World Economic Outlook in Bangkok, where the IMF and World Bank annual meetings run through October 18. Meanwhile, climate change, high energy prices and rapid technological disruption add to the instability. As a result, the divide between economic winners and losers keeps growing.

War and Energy Shocks Hit the Gulf

Conflict in the Gulf and the war on Iran sit at the center of the fund’s concerns. Bahrain, Iraq, Kuwait and Qatar have all seen their oil and gas exports interrupted. Consequently, the IMF expects double-digit drops in their total output this year. Iran’s closure of the Strait of Hormuz shut off some 20 percent of the world’s oil.

Global growth held up better than feared after that closure, according to Ajay Banga. However, he told Reuters that pressures were building again. Governments now treat energy as a strategic priority rather than a market commodity.

Banga described that shift in thinking while financial officials gathered in the Thai capital this week. “What’s happening is that every country has now suddenly figured out that energy security is national security,” said Ajay Banga, president of the World Bank, in Bangkok, where financial officials from around the world have gathered this week for meetings. Poorer and developing nations stand to suffer most, because they lack the resources to compete with richer countries for limited supplies.

Saudi Arabia Faces a Murkier Outlook

The IMF forecast for Saudi Arabia shows a more diversified economy under strain. The fund estimates the kingdom’s economy will shrink by 3.3 percent this year. Then it expects growth of 7.9 percent in 2027.

However, the fund completed that forecast before recent attacks on Riyadh airport and other sites. This week’s Houthi attacks will complicate the picture. Furthermore, they threaten the kingdom’s push to grow tourism. Some expatriate residents of Riyadh have said they no longer feel the kingdom is safe.

Other forces add to the instability. The IMF also cites Russia’s war in Ukraine and the large tariffs that US President Donald Trump imposed. Together, these shocks leave vulnerable economies with little room to maneuver.

Debt Burdens Squeeze Developing Economies

Debt is another fault line. Taiwo Oyedele, chair of the Group of 24 nations, called the debt vulnerabilities of many developing economies a “major barrier” to inclusive growth. He is also Nigeria’s minister of finance and coordinating minister of the economy. Speaking to reporters in Bangkok, he said developing nations pay roughly $500 billion more for their debt than developed countries do.

Oyedele pointed to a worrying pattern among G24 members, especially in Africa. “What we have seen by members of the G24 and across particularly the developing countries such as those in Africa, is an increasing body of not just high debts, but high costs of debts,” said Oyedele, who is also Nigeria’s minister of finance and coordinating minister of the economy. Governments are meanwhile grappling with growing fiscal deficits.

Heavily indebted countries have come under immense pressure this year. Supply shocks from the war in the Middle East strained their budgets. In addition, a “super El Niño” pushed up food prices, and borrowing costs surged.

The G24 secretariat explained why such burdens choke off progress. “Debt is something that restrains growth, because countries then do not have enough resources to finance further growth, or they are spending most of their resources just paying off the debt,” said Iyabo Masha, director of the G24 secretariat. She added that recent improvements to the sovereign debt architecture should help countries resolve crises more quickly.

Calls for Concessional Financing

The G24, a bloc of emerging and developing market nations, urged the IMF and World Bank to act. It wants more accessible and affordable concessional financing for vulnerable countries in the near term. At the same time, members say they are working to mobilize private capital and reduce public spending.

Masha cited Senegal as an example of progress. She said the country was “quite close” to a final resolution with its creditors. Reuters reported last week that the West African nation aims for an agreement in principle with official lenders and bondholders by December. That deal would come two years after misreported debt, which analysts estimated at $13 billion, emerged.

Elsewhere, the outlook looks softer. The IMF trimmed its growth forecasts for Latin America and the Caribbean for this year on Tuesday.

AI Props Up Growth but Widens the Divide

Artificial intelligence spending is keeping the world economy growing at roughly 3 percent a year, Kristalina Georgieva said on Monday. The IMF managing director spoke on the opening day of the annual meetings. Even so, an energy shock drags on most countries. The fund’s July update projected 2026 global growth at 3 percent, down from 3.5 percent in 2025.

The biggest winners are the Asian economies that build the hardware behind AI. According to the July update, Taiwan, South Korea, Thailand and Malaysia beat first-quarter forecasts by an average of 4.4 percent on an annualized basis. South Korea grew at a 7.5 percent pace, against the 1.8 percent the fund had projected in April.

Georgieva said AI adoption could add 0.5 to 1 percentage point a year to growth in advanced economies. In emerging economies, the gain would range from 0.2 to 0.8 points. Moreover, she said AI hardware and related products now make up more than a tenth of world goods trade. She also expects AI investment as a share of global GDP to surpass what went into building the railroads or the electricity grid.

A “Slow-Moving Tsunami” for Jobs

However, Georgieva warned that the boom bypasses most countries outside that supply chain. She called AI a “slow-moving tsunami” for employment. The IMF expects it to eventually touch about 40 percent of jobs worldwide, and many could be downgraded or eliminated.

Exposure runs around 60 percent in advanced economies and roughly 23 percent in low-income countries. Poorer nations score lower mainly because AI has not reached them yet. In other words, the lower figure reflects delay rather than safety.

Young people entering the workforce are first in line, she said. AI is absorbing the routine tasks that entry-level jobs rely on. Singapore President Tharman Shanmugaratnam agreed on the same panel, noting that demand for graduates’ first jobs is already falling. He warned that AI could widen the gap between rich and developing economies if governments fail to act.

What the Bangkok Meetings Signal

Taken together, the warnings paint a stark picture for the global economy. War, energy insecurity, heavy debt and a lopsided technology boom all push in the same direction. Wealthier and better-connected economies pull ahead, while poorer ones fall behind.

As the meetings continue through October 18, developing nations will press for cheaper financing and more support. Whether the IMF and World Bank respond will shape how widely this year’s fragile growth is shared.