Business

Tech-heavy Nasdaq falls 2.6 percent as debate rages over whether AI is a bubble.

US tech stocks have dropped sharply amid market jitters over the sustainability of companies’ enormous capital investments in AI.

The Nasdaq Composite, which is dominated by tech firms linked to the AI boom, fell 2.6 percent on Thursday, its steepest fall since the index tumbled 4.2 percent on June 5.

The broader S&P 500 slid 1.21 percent, the benchmark’s biggest drop since a 1.52 percent decline on July 29.

Apart from Apple, each of the “Magnificent 7”, which make up more than one-third of the overall market, saw substantial losses.

Meta dropped nearly 7 percent after it raised its projected capital spending for this year to $135bn to $145bn in its latest earnings report, even as the Facebook parent company’s net profit fell short of expectations.

Amazon fell 4.6 percent, while Nvidia dropped 4.4 percent.

Tesla and Alphabet both fell 3.1 percent, while Microsoft declined 2.2 percent.

Apple rose 1.2 percent.

The sell-off extended to other major tech players, including Intel and Advanced Micro Devices, both of which fell about 8 percent, and Broadcom, which slid 4.3 percent.

Rising oil prices since February, due to the fallout of the US-Israel war on Iran, added to the downbeat mood.

Brent crude futures rose 4 percent on Thursday and continued to climb on Friday morning, taking the international benchmark above $114.20 a barrel, its highest since May.

Stocks slip in Asian trading

Major stock markets in Asia opened lower on Friday, following the losses on Wall Street.

Japan’s benchmark Nikkei 225 fell more than 2 percent in morning trading before recovering some ground, while South Korea’s KOSPI dropped as much as 3.5 percent.

The Hang Seng Index in Hong Kong fell about 0.5 percent.

Jay Goldberg, a senior analyst at Seaport Research Partners in San Francisco, said the swings in the market appeared to be driven more by sentiment than underlying fundamentals.

“In short, nothing has changed. Investors have just decided to be afraid this week. Everyone I speak to points to a different cause for the downfall … It’s just a giant wall of worry,” Goldberg told Al Jazeera.

“There are legitimate concerns about the AI trade, but this level of shift in the markets is driven much more by investor sentiment than any tangible reason.”

US tech companies’ huge investments in AI have stoked intense debate about whether a market bubble is forming similar to the one that preceded the 2000 dot-com crash.

While some Wall Street analysts view current levels of investment in datacentres and graphics processing units as unsustainable, others argue that AI will revolutionise society to a degree that justifies the eye-watering sums involved.

Global AI investment is forecast to reach $2.7 trillion in 2026 and $3.6 trillion in 2027, according to technology insights company Gartner.

On trade, investment and innovation, leaders will work toward conclusion of a Canada-Turkiye Free Trade Agreement.

Canadian Prime Minister Mark Carney and Turkish President Recep Tayyip Erdogan have announced the launch of a Canada-Turkiye Strategic Partnership, backed by a three-year action plan.

“In an increasingly complex global security environment, rising geopolitical uncertainties, and evolving humanitarian challenges, a strong and resilient Canada-Turkiye partnership is essential, providing a foundation to mitigate shared threats and capitalise on new opportunities,” said a statement by the two leaders on Thursday.

This comes as Carney is on a two-day visit to Turkiye, seeking to forge a new partnership as Canada looks to reduce its dependence on the United States.

The partnership’s three-year action plan rests on four pillars: trade and investment; defence and security; energy; and ties between people, the statement said.

On trade, investment and innovation, the two leaders agreed to “work toward successful conclusion of a Canada-Turkiye Free Trade Agreement”, it said. They will also expand bilateral trade and investments in priority sectors including energy supply, defence production, aerospace, and Artificial Intelligence (AI).

On defence and security, the leaders “underlined their intent to deepen bilateral and multilateral cooperation”. They also agreed to “strengthen cooperation in support of peace and security in the Euro-Atlantic region and beyond including Ukraine, South Caucasus, and the Middle East, in particular Gaza”.

Meanwhile, energy ministers from both countries will work on areas such as LNG, nuclear energy and critical minerals.

‘Launching a new era’

Speaking to reporters in Ankara alongside Carney on Thursday, Erdogan said the two countries “hope to increase our trade volume, which currently stands at around $3 billion, to $5 billion initially and then to $10 billion through the steps we will take”.

He said the two sides had agreed to begin free trade agreement negotiations before the end of the year to boost trade and investment, adding that elevating Turkiye-Canada relations to the level of a strategic partnership would not be merely a symbolic step on paper.

“We have today overcome the disconnect that had persisted between Turkiye and Canada for many years. Now we are launching a new era between Turkiye and Canada,” he said.

Canadian and Turkish leaders will convene next month in Ankara for the first round of trade talks, the joint statement said.

Carney is on the first bilateral visit by a Canadian prime minister to Turkiye, although he travelled to Ankara in July to attend the NATO summit.

He was scheduled to meet with Erdogan and other officials before travelling to Istanbul for talks with Turkish business groups as the two countries seek to deepen trade ties.

The Canadian prime minister has sought to diversify partnerships and reduce reliance on the US amid an escalating trade war with President Donald Trump, marked by US tariffs on Canadian goods, retaliatory measures by Canada and statements questioning Canadian sovereignty.

Riyadh postpones flagship investment conference until 2027, orders government staff to work from home.

Saudi Arabia’s Future Investment Initiative (FII) conference has been postponed until next year, according to a statement on the official website, as deadly strikes by the Iran-backed Houthis against the kingdom continue.

The annual event was due to start next week on October 26 and run through October 29, with a date next year to be announced “very soon”, the statement released on Tuesday said.

FII Institute chief executive officer Dr Maha Bint Mishari Al Saud said the decision “comes from a deep commitment to our partners, members, speakers and delegates”.

“Because this is our landmark tenth edition, we want to ensure it delivers the full scale, extraordinary quality, and unforgettable impact that our community has come to expect and truly deserves,” she said.

Informally dubbed “Davos in the Desert”, a nod to the World Economic Forum’s annual meeting in Switzerland, the state-backed conference showcases the kingdom’s ambitious investment plans in a bid to attract billions of dollars needed to fund its economic transformation away from hydrocarbons towards tourism, sport and technology.

Expected speakers included: Alphabet & Google’s president and chief information officer, Ruth Porat; Goldman Sachs Group chairman and CEO David Solomon; and BlackRock chairman and CEO Laurence Fink, according to the FII website.

Fighting between a Saudi-led coalition supporting Yemen’s internationally recognised government and the Iran-aligned Houthis has escalated in recent weeks.

The Houthis, also known as Ansar Allah, have hit military, energy and civilian infrastructure across Saudi Arabia, including Riyadh’s international airport, killing at least 18 people and injuring hundreds more.

Government staff to work from home

Government agencies in the Saudi capital, Riyadh, have told employees to work from home, one worker and two consultants told the AFP news agency, as the city comes under repeated attack from the Houthis.

The Kingdom Centre, a 99‑storey tower in downtown Riyadh that houses the International Monetary Fund’s regional office, also requested workers stay away until further notice.

On Sunday, an employee of a government agency in the capital received a message saying, “It has been decided to implement remote work from Monday to Thursday this week”. The message added: “We ask everyone to continue their activities as normal.”

Companies based in the King Abdullah Financial District, which hosts offices of major United States firms, have also asked employees to work from home, according to other sources.

US federal prosecutors allege the defendant was in frequent contact with unnamed member of royal family.

An ex-OpenAI engineer accused of planting a recording device in an executive conference room at the AI company appears to have received considerable support from the Saudi government, United States prosecutors have said in a court filing.

Federal prosecutors allege that the defendant, Abdulrahman Alfozan, 35, was in frequent communication with an unnamed member of the Saudi royal family and that a Saudi military official paid for a one-way plane ticket for Alfozan’s wife and young son to return to Saudi Arabia after his arrest, according to the court document, made public late on Sunday.

Prosecutors made those allegations as they asked a federal judge to keep Alfozan in US custody to await trial, arguing he is a flight risk. Alfozan, a Saudi national and lawful permanent resident in the US, is scheduled to appear in federal court in San Francisco later on Monday.

The case has highlighted security challenges around sensitive AI research as companies and governments compete fiercely for an edge in the transformational technology.

“The defendant went to significant lengths to create customized, encrypted recording devices to secretly record highly sensitive meetings involving senior OpenAI personnel and executives, high-level business counterparts, and government officials, all while communicating with individuals of significance in Saudi Arabia and pursuing opportunities in — and making plans to travel to — Saudi Arabia,” prosecutors wrote in a detention memo.

The Saudi government media office did not immediately respond to a request for comment. A lawyer for Alfozan did not immediately respond to a request for comment.

The lawyer, William Pernik, previously asked for Alfozan to be released from custody, subject to conditions including location monitoring and surrendering his passport, and said Alfozan had spent the last 15 years in the US and had applied to become a citizen.

The lawyer said a planned trip by Alfozan to Saudi Arabia this month was booked before he was under investigation and was for “family and immigration reasons”, according to a court filing.

Investigation remains active

US prosecutors charged Alfozan last week with using an electronic device to intercept oral communications. Alfozan plugged a recording device into the back of a television in an executive conference room at one of OpenAI’s San Francisco buildings, according to a criminal complaint.

Meetings involving government officials took place in the conference room around the time the device was installed, according to the prosecutors’ detention memo.

Prosecutors said the investigation remains active and additional charges could be brought against Alfozan.

A member of the Saudi royal family sought to recruit Alfozan for an AI-focused role in Saudi Arabia, writing in one message, “Saudi needs you more then [sic] the US!” Alfozan replied, “100,” according to messages cited by prosecutors.

Before his arrest, Alfozan was scheduled to fly to Riyadh during a planned two-month parental leave. His wife told investigators that she and their son planned to move permanently to Saudi Arabia and that Alfozan eventually intended to join them, according to prosecutors.

In an Arabic-language interview on the Identity Capital podcast last month, Alfozan said that he visits Saudi Arabia three or four times a year, follows developments there and advises or mentors Saudi startups.

He said meeting Prince Mohammed bin Salman, then deputy crown prince, during a 2016 gathering with young Saudi tech workers in Silicon Valley persuaded him to learn at a top tech company before bringing those skills back home.

While Alfozan was working at Facebook, he and other Saudis in Silicon Valley formed a consulting initiative that linked Saudi public- and private-sector organisations with expertise in big data, the internet of things and machine learning.

OpenAI previously said it discovered the device on September 30 and referred the matter to the FBI.

Al Jazeera has reached out to the Saudi embassy for comment.

GDP growth picks up from Q2 amid AI-driven boom in exports.

China’s economy has grown faster than expected in the most recent quarter amid booming exports underpinned by artificial intelligence, according to official figures.

China’s gross domestic product (GDP) expanded 4.5 percent in the July-September period from the same quarter a year earlier, picking up from 4.3 percent growth in the second quarter and beating most analysts’ forecasts, figures released on Monday by the National Bureau of Statistics showed.

During the first nine months of the year, GDP grew 4.6 percent year-on-year, according to the preliminary figures.

While China’s technology-related exports have surged during the AI boom, growth in the world’s second-largest economy has been dampened by weak domestic demand and a sagging property market.

China’s ruling Communist Party has set a GDP growth target of 4.5 to 5 percent for 2026, which would be among the slowest expansions in decades, excluding during the COVID-19 pandemic.

Chinese exports surged more than 16 percent in the first three quarters of the year to reach 23.19 billion yuan ($3.47bn), according to the official data, largely due to strong demand for semiconductors and other tech-related goods.

Retail sales, a key measure of domestic consumption, increased 1.1 percent year-on-year in September and 2.6 percent during the first nine months of 2026.

Industrial production, which measures output in sectors such as manufacturing and mining, rose 5.5 percent in September, taking growth in the first three quarters to 5.3 percent.

Investment in fixed assets, which covers spending on real estate, factories and machinery, edged up 0.7 percent last month but contracted 7.2 percent during the January-September period.

Zhiguo He, a finance professor at Stanford University’s Graduate School of Business who studies the Chinese economy, said that while China’s economy is on track to hit official targets, Beijing will be wary of the continuing reliance on export-driven growth.

“I expect Beijing is getting 4.5 percent as wanted,” He told Al Jazeera.

“A managed slow slowdown is the best Beijing can hope for,” he said.

“Real estate is still shrinking. This is what Beijing wanted and a good thing, and China’s households have been adapting their expectations based on this.”

Baghdad, Iraq – Sitting anxiously in his small office in Jameela market, one of Baghdad’s main wholesale markets, food trader Hamza al-Rudayni is waiting to see what the coming days will bring.

A decision by the Iraqi government to devalue the country’s currency, the dinar, against the US dollar has left traders like him facing sudden losses and uncertainty over the prices they should charge for their goods.

“I don’t know what to do,” al-Rudayni told Al Jazeera after the devaluation reduced the dollar value of his dinar holdings, leaving him with less money to purchase imported goods.

“All I know is I woke up a few days ago to discover that I had lost 25 million Iraqi dinars (roughly $16,500 at the new exchange rate) because of this decision, while larger merchants lost billions,” he said.

Al-Rudayni entered the wholesale trade market last year after losing his previous job at a private Iraqi bank that he says was sanctioned by the United States Treasury. He sold his car and used his savings to start trading with a larger merchant before recently launching his own business.

With exchange-rate fluctuations making prices unpredictable, al-Rudayni said he and many other traders have chosen to suspend buying and selling until the situation stabilises.

“Market activity has ground to a halt,” al-Rudayni said. “Traders buy goods in dollars but sell them in dinars, as regulations prohibit them from selling in dollars.”

That is the root of the problem for traders: A weaker dinar means they have to pay more in local currency for goods imported in dollars, while making it harder to determine the right price they should charge customers for goods they already have in stock.

Why devalue?

On October 7, the Iraqi government introduced a new official exchange rate against the US dollar, in an attempt to ease a financial crisis triggered by the US-Israeli war on Iran and the  disruption of oil exports through the Strait of Hormuz.

Before the war, Iraq exported around 3.5 million barrels of oil per day through the Strait of Hormuz, accounting for 90 percent of Iraq’s government revenue.

The Central Bank of Iraq decision set the rate at 1,520 dinars per US dollar for cash sales to the public. It was previously set at 1,320 dinars per dollar.

Devaluing the Iraqi dinar by almost 15 percent against the dollar allows the government to receive more local currency for every dollar of oil revenue it converts, helping it cover public spending, including government employee salaries.

“It is my decision and I am responsible for it,” Iraqi Prime Minister Ali al-Zaidi said during a meeting with parliamentary leaders on Thursday.

“I was facing three challenging options to cover salaries and other mandatory expenditures,” al-Zaidi added. “The first is to cut salaries by 35 percent … the second is to pay the salaries every 45 days … while the third is to resort to foreign loans.”

Al-Zaidi, a former banker, also said that his government had inherited public debt exceeding 208 trillion Iraqi dinars ($139bn at the new rate) when it took office in May. He said the government needed approximately 10 trillion dinars ($6.7bn) each month to cover salaries and other essential expenditure.

A shortage of liquidity

The crisis in the Strait of Hormuz had caused a severe financial squeeze for the Iraqi government.

Although the situation has eased somewhat in recent weeks after Iraq’s oil exports partially recovered, they have yet to return to their pre-war levels.

Mudher Mohammed Salih, the Iraqi prime minister’s financial adviser, said in August that the Central Bank of Iraq’s foreign currency reserves had declined from $106bn to approximately $80bn.

To make up for the loss of revenue, the Iraqi government has also turned to borrowing from domestic banks to cover salaries and other expenses.

A Finance Ministry official told Al Jazeera that ensuring salaries were paid on time remained the government’s main priority, describing this issue as a matter of domestic economic stability.

“Our hands are tied regarding the revenue and how to maintain enough money to ensure that we can pay the salaries,” the official, who asked to remain anonymous because he was not authorised to speak publicly, said.

Economists have warned that while adjusting the exchange rate could ease some immediate fiscal pressures, it would not address the deeper weaknesses in Iraq’s economy.

“Nothing in economics is sacred, including the exchange rate,” said Nabil al-Marsoumi, professor of economics at Al Maaqal University in Basra. “It can be adjusted, but only after all other options have been exhausted.”

“In any case, the exchange rate shouldn’t be used as a cover-up for failures in the state’s economic and fiscal policies,” he added.

The G20 finance ministers and central bank governors are gathering in Bangkok, Thailand, on Thursday amid an uncertain global outlook shaped by the US-Israel war on Iran.

The meetings are being held in conjunction with the annual meetings of the International Monetary Fund (IMF) and the World Bank, taking place in the Thai capital from October 12 to October 18.

Here are some of the key details about the meetings:

What are the G20, the IMF and the World Bank?

The G20 is an economic forum comprising 19 large economies, including the United States, China, the United Kingdom, Australia, Brazil, India, Japan, Indonesia and Saudi Arabia, as well as the European Union and the African Union.

The grouping has an annually rotating presidency, currently held by the US.

Together, the G20 countries account for about 85 percent of global gross domestic product (GDP) and three-quarters of global trade.

The G20 was established in 1999 as a forum for finance ministers and central bank governors to address shared economic concerns in the wake of the Asian Financial Crisis, before expanding into a broader forum for national leaders.

The IMF, based in Washington, DC, is an international financial institution that promotes international cooperation on monetary policy, trade and economic growth.

Its membership includes all but a handful of the world’s sovereign states, including North Korea, Cuba, the Vatican City and Monaco.

The World Bank, also based in Washington, DC, primarily serves as a provider of loans and grants to developing countries. It has 189 member countries.

The IMF and the World Bank were created at the 1944 Bretton Woods conference in the US, convened by the Allied Powers to establish the contours of the post-World War II international financial order.

Who will be attending the meetings?

Most finance ministers and central bank governors of the G20 will be in Bangkok, along with IMF Managing Director Kristalina Georgieva and World Bank Group President Ajay Banga.

US Treasury Secretary Scott Bessent will be a notable absence from the gatherings, as the top economic official of the world’s biggest economy and G20 chair.

US officials have cited “domestic engagements” for Bessent’s decision to skip the events, at which Washington will be represented by Deputy Secretary Francis Brooke and Undersecretary for International Affairs Erin Browne.

The G20 meeting, one of several gatherings of the group’s finance ministers each year, will help shape the agenda for the headline leaders’ summit in Miami, Florida, taking place on December 14-15.

What is on the agenda?

The economic fallout from the US-Israel war on Iran is expected to dominate discussions.

Attacks across the Middle East have upended economic activity across the region, while disruption to shipping in the Strait of Hormuz has driven a surge in energy prices worldwide.

Crude oil prices have exceeded $100 a barrel for much of the past eight months, placing a strain on government coffers and household budgets, particularly in the Gulf region and the rest of Asia.

In advance of the meeting, Australia’s Treasurer Jim Chalmers MP said he would use the discussions to call for an end to the conflicts in the Middle East and the reopening of the Strait of Hormuz “because that’s what the global economy desperately needs”.

“The war in the Middle East is having a devastating economic impact and is pushing up fuel prices, inflation and interest rates around the world,” Chalmers said in a statement.

Other issues likely to feature on the agenda include the ballooning debt levels of many countries, which exceed 100 percent of GDP in the US, Canada, Japan, Italy and France.

In a speech on Wednesday, Georgieva warned that mounting debt posed a threat to the global economy and that there was no “magic” formula that would allow governments to avoid tax hikes or spending cuts.

G20 members will also bring more specific individual concerns to the table based on their economic and geopolitical priorities.

The US, for example, has repeatedly expressed concern about “global imbalances”, a veiled reference to China’s state-driven industrial model that has allowed Chinese exporters to flood overseas markets with cheap goods.

US President Donald Trump has long claimed that China’s large trade surplus, which stood at a cumulative $938bn in September, proves that international trade is stacked against US manufacturers.

In a statement addressed to the IMF on Wednesday, Bessent called for action to address mismatched trade balances.

“This especially includes strengthening its analysis and engagement on the role non-market policies and practices and exchange rates play in driving external imbalances,” Bessent said.

“Policymakers around the world are having difficult discussions about how to sustain market-based systems amid distortionary policies from some economies that skew competition and hurt employment.”

Divisions and competing interests cloud the prospects for coordination, however.

At the last meeting of G20 finance ministers in Asheville, North Carolina, US, held on August 31 and September 1, member countries failed to issue a joint communique after China objected to language to do with trade.

The surge in soccer fans this summer was bad for some businesses in Los Angeles.

World Cup host cities had lofty economic expectations for the summer tournament. But the city’s hotels only got a 1% bump in occupancy, according to a report published this week by Hospitality Education and Research Organization, a project of the Hotel Assn. of Los Angeles.

Seventy-two percent of surveyed hotels said the tournament hurt their 2026 finances, and 48% called the impact “extremely negative.” Just 2% said it met projections.

Downtown occupancy reached 66% in June, down from 71% a year earlier, the report says. Room nights fell between 10% and 12%.

Hotel guests at the Metropole restaurant just opposite the main lobby at the Hotel Indigo in downtown Los Angeles in May.

(Genaro Molina / Los Angeles Times)

Ahead of World Cup tournaments, FIFA holds large blocks of rooms. But FIFA canceled or released up to 70% of the hotel room blocks it had reserved in host cities, including Los Angeles.

“We understood that we were maybe going to be disappointed with attendance going into the World Cup simply by the volume of cancellations that came out of the room block agreement,” said Jackie Filla, president and CEO of the Hotel Assn. of Los Angeles.

The disappointing turnout led to staff reductions. Of the hotels surveyed 82% reduced seasonal staff and more than six in 10 reported reducing employee shifts, scheduled hours, or permanent staff.

Hotels did raise prices, with the average daily rate hitting $228, the highest of any comparable L.A. event in three years. But occupancy was 71%, well below the 83% recorded during Taylor Swift’s Eras Tour.

A visitor walks in the lobby of the Hotel Indigo in downtown Los Angeles.

(Genaro Molina / Los Angeles Times)

The survey drew 58 responses from 210 hotels, and the analysis was done by travel-data firm Rove using CoStar and AirDNA data. International visitors were also scarce, with Los Angeles welcoming 700,000 international arrivals in June and July — roughly 80,000 visitors below 2024 levels for the same period, the report says.

“We particularly didn’t see a lot of foreign visitors and that’s something that was disappointing,” Filla said. “Foreign visitors do spend three times the amount of money as the average domestic traveler.”

Short-term rentals, meanwhile, gained. Their demand rose 23% and revenue 21% versus July 2024, while hotel revenue fell 3.3%. Airbnb, the tournament’s official fan accommodation, offered new hosts $750 incentives.

The city is currently weighing a temporary proposal to ease its short-term rental rules through the end of 2028 to accommodate tourists. “That will really, truly undercut the business of hotels,” Filla added. “We saw some of that with the World Cup.”

The worry is carrying over to the Olympic Games, set to be hosted in Los Angeles in 2028. Six in 10 surveyed hoteliers expect an Olympic rental surge to hurt their bookings and rates, the report says.

The World Cup “gave us false hope to recover from a negative year,” one Los Angeles hotelier said, according to the report. “I also feel [the] same thing will probably happen for [the] Super Bowl and Olympics.”

Iraq, Bahrain, Kuwait and Qatar face double-digit declines in GDP amid the fallout from the US-Israel war on Iran.

The economy of the Middle East and Central Asia is set to shrink in 2026 amid the fallout of the US-Israel war on Iran, with countries such as Kuwait and Qatar facing double-digit contractions, according to the International Monetary Fund (IMF).

The region’s gross domestic product (GDP) is forecast to contract by 0.3 percent this year, a sharp downgrade from the 1.9 percent expansion projected in April, the IMF said in its latest economic outlook on Tuesday.

The IMF cited the prolonged disruption to shipping in the Strait of Hormuz, a conduit for one-fifth of global oil supplies in peacetime, for the downgraded outlook.

Kuwait, Iraq and Qatar are forecast to have the most severe economic contractions, with their GDPs expected to shrink by 16.7 percent, 16 percent and 15.6 percent, respectively.

Bahrain’s GDP is forecast to contract by 11.3 percent, while Iran’s economy is projected to shrink by 7.6 percent.

Saudi Arabia, which has partially offset the hit to its energy sector by boosting oil exports through the East-West pipeline, is projected to record negative growth of 3.3 percent.

Kyrgyzstan is expected to have the strongest growth in the region, with GDP forecast to expand 9 percent.

The Middle East and Central Asia is the only region that is expected to experience negative growth in 2026.

Emerging and developing Asia’s GDP is forecast to grow 5.1 percent, while the economies of Sub-Saharan Africa and Latin America and the Caribbean are projected to expand 4.5 percent and 2.3 percent, respectively.

The United States and China, the world’s two largest economies, are forecast to register growth of 2.3 percent and 4.5 percent, respectively, while the eurozone’s GDP is estimated to grow 1.1 percent.

The IMF said it expected global GDP to grow 3.1 percent, up from 3 percent in its previous outlook.

The Washington, DC-based institution said while economic activity had proved resilient this year, the global economy faced multiple risks.

“Further escalation in conflicts, a reassessment of expectations surrounding artificial intelligence (AI), renewed trade tensions, and fiscal vulnerabilities could weaken growth,” it said.

“On the upside, stronger momentum in AI investment and productivity gains from AI or a sustained easing of geopolitical and trade tensions could strengthen growth.”

The Swedish academy says the academics’ models are ‘now used by central banks and ​governments around the world’.

The ⁠2026 Nobel Prize in Economic Sciences has been awarded to US academics Robert Hall and Michael ⁠Woodford for their work on how monetary and fiscal policy can help stabilise fluctuations in the economy, according to the Royal Swedish Academy of Sciences.

The winners of the prestigious award, formally known ⁠as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel and the final prize to be given out this year, were announced on Monday.

The two laureates developed new macroeconomic models that improve people’s ability to implement effective stabilisation policies, enabling fiscal and monetary policy measures that can reduce damaging swings in the economy.

“The laureates’ work has provided us ‌with a stable theoretical foundation for the models that are now used by central banks and governments around the world,” John Hassler, chair of the Committee for the Prize in Economic Sciences, said in a statement.

“With them, we are better equipped to deal with shocks in the economy, such as energy crises or sudden changes in how much households consume.”

During the oil crises in the 1970s, the existing Keynesian models used to determine when and how measures should be implemented to tackle recessions or other economic fluctuations stopped working. Hall and Woodford then developed new tools to understand what policy responses could be the most effective.

“Rather than basing the models on statistical links between macroeconomic variables, such as inflation, production and consumption, they chose to build them on a microeconomic foundation,” the academy said. “This encompasses an understanding of how the total mass of individual households and businesses affect the economy through their actions.”

The economics prize, first awarded ⁠in 1969, is not part of the five original awards ⁠created in the 1895 will of industrialist and dynamite inventor Alfred Nobel, but was instead established by Sweden’s central bank.

The majority of previous laureates have been from the United States. Only three women have ⁠ever won, most recently Claudia Goldin in 2023 for her work on how gender has affected pay and employment over time ⁠in the US.

Last year’s winners – Joel Mokyr, Philippe Aghion and Peter Howitt – won for ‌their work on “creative destruction” and how new technology and production methods can boost growth and living standards.

Like the other Nobel awards, the economics prize consists of a diploma, a gold medal, and a $1.2m cheque.

The Nobel prizes for medicine, physics, chemistry, literature and peace were announced last ‌week, with South African jurist Navi Pillay and Canadian writer Anne Carson among the winners.

Finance officials from around the world will gather in Bangkok this week under the shadow of a widening war in the Middle East, the biggest-ever energy supply shock and rising interest rates that together pose daunting risks to already-sluggish global economic growth.

The US-Israel war on Iran, now in its eighth month, and its inflationary impact are slated to dominate the agenda and sideline conversations during the annual meetings of the International Monetary Fund (IMF) and World Bank, held outside Washington for the first time in three years.

IMF Managing Director Kristalina Georgieva told Reuters News Agency that 18,000 people were registered to attend the meetings, 4,000 more than the last off-site meetings held in Morocco in October 2023.

Notably absent will be United States Treasury Secretary Scott Bessent, who dispatched two senior officials in his stead while he handles some “domestic engagements”, a US official said. Federal Reserve Board Chairman Kevin Warsh will attend and is slated to participate in a public event with Georgieva on October 16.

Several other finance ministers were also staying home due to domestic budget and election duties, but most central bankers would attend, Georgieva said.

Bessent’s decision to skip the high-profile gathering and a meeting of the Group of 20 (G20) major economies, which the US leads this year, may frustrate counterparts amid rising tensions over the Iran war, Ukraine’s battle against Russia’s invasion, and the US move to impose sanctions on the International Criminal Court.

Fossil energy reserve release

The Group of Seven (G7) countries have agreed to release 100 million barrels of diesel and crude oil from emergency reserves under pressure from US President Donald Trump, who is keen to see lower petrol prices before November elections that could see his Republican Party lose control of Congress.

Trump on Friday announced a deal with Russia that would provide even more diesel to global markets and a temporary waiver of US sanctions designed to deprive Moscow of revenues for its ‌‌war on Ukraine. The move drew swift criticism from Ukrainian President Volodymyr Zelenskyy.

More than one billion barrels of oil have been released, mainly from onshore commercial inventories, since the start of the war on February 28. But industry executives say the amount of oil in storage that is accessible to the global market is running low, making the market more fragile and fuelling pressure on prices.

The IMF has signalled little change in its forecast for three percent global growth in 2026, and may edge its forecast for next year slightly higher. But some countries will see downgrades, including Ukraine, now in its fifth year of war against Russia’s invasion, and Gulf countries hit by Iranian strikes and sharply reduced energy exports.

IMF research released on Tuesday showed that sharp spikes in food and energy prices are an increasingly common source of crises that drive inflation expectations higher for longer, worsen poverty and threaten economic stability.

One headache for policymakers is the growing public debt burden that is sapping growth and adding inflationary pressures. The IMF says public debt is at the highest level since World War II and will exceed 100 percent of gross domestic product (GDP) before 2030.

Advanced economies, led by the US, have the highest debt-to-GDP ratios, but emerging markets and low-income countries are particularly vulnerable, given a perfect storm of challenges: capital outflows in search of higher US rates, weather extremes triggered by the El Nino climate phenomenon, and a lack of investment in artificial intelligence (AI), which has mitigated negative supply shocks in the US and other rich countries.

Developing countries are particularly vulnerable given high public debt levels that will have to be renegotiated at higher interest rates. Together, they face $400bn in debt payments to external creditors in 2026, and interest payments already exceed 10 percent of revenue on average.

Many lower-income countries are worried about new IMF recommendations for loan programmes that call for fewer but deeper reforms as a condition for approving lending, a change that many fear will lead to painful austerity measures.

Elon Musk’s latest comments come days before Mukesh Ambani’s low-cost Reliance Jio’s parent launches India’s largest-ever initial public offering.

‌Billionaire entrepreneur Elon Musk has said he would price his Starlink satellite internet service affordably ⁠in India to take ⁠on Mukesh Ambani’s low-cost Reliance Jio, escalating his attacks on the rival tycoon days before Jio’s parent launches the country’s largest-ever initial public offering (IPO).

Jio Platforms, ⁠which owns the telecom arm, is targeting a valuation of $106bn in the offering. Much like SpaceX-owned Starlink, Jio’s satellite venture is also awaiting final ⁠security clearance to launch.

Cheap data is the playbook that built Jio in India, and the one Musk has used in markets like Kenya to unsettle local telecom players. SpaceX now plans to enter the mobile carrier market itself, starting in ‌the United States.

Musk did not specify prices for India, where mobile data costs about rupees 7.74 ($0.08) per gigabyte, among the lowest in the world.

“Obviously, if Starlink is too expensive in India, no one will buy it, so SpaceX will need to make pricing affordable,” he said in a post on his social media platform X on Saturday.

“The reality is that ⁠competition would greatly benefit the average citizen in India by ⁠giving them more choices, as it always does. Ambani’s profits will be lower, but he is not going out of business,” Musk added.

‘Prime Minister Ambani’

Musk’s remarks were the latest in ⁠a series of X posts in which he accused Prime Minister Narendra Modi’s government and Ambani of stalling Starlink’s entry ⁠into one of the world’s biggest internet markets to ⁠favour market leader Jio.

The posts have marked a sharp turn for Musk, who has long enjoyed a warm public rapport with Modi.

India’s government has denied any bias in its approval process, ‌noting that the three satellite ventures seeking to launch, including Starlink’s and Jio’s, are all awaiting final security clearance.

Late on Friday, Musk taunted Ambani directly, addressing ‌him as “Prime ‌Minister Ambani” and asking whether he would “consider allowing Starlink to compete”.

Reliance has not responded to Musk’s remarks.