The global economy has displayed "surprising resilience" despite the Middle East conflict and tariffs, driven partly by artificial intelligence-related investments.
That fortitude may be under threat, the Bank for International Settlements (BIS) said in its annual report on Sunday.
"The global economy remains caught in the crosscurrents of progress and peril," the BIS said. "The perils have grown with pressure points around risks of persistent inflation, the sustainability of AI-related investments, growing financial vulnerabilities and weakening fiscal positions."
The energy shock due to the war in the Middle East has accelerated inflation and slowed global economic growth. Prices in the US rose to a three-year high of 4.2% in May. The energy index increased 23.5% for the 12 months ending May.
That inflation shock has already forced institutions to reassess the outlook. In April, the International Monetary Fund revised its global growth to 3.1% in 2026, under the assumption of a limited conflict. It warned that a prolonged war could weaken growth and unsettle markets further.
