BofA improves global growth forecast as AI boom accelerates: Daily Chart
Growing investment in AI is expected to drive global growth faster than initially modeled, Bank of America said in a mid-year report published late last week.
Fueled by a mix of headwinds, BofA strategists now see the global economy growing by 3.2% in 2026 and 3.5% in 2027, with AI in the driver’s seat. Economists had previously estimated growth at 3.1% and 3.4% in 2026 and 2027, respectively.
“In addition to the peace agreement, the main drivers of global economic growth this year are the AI-driven export cycle in Asia and AI growth in the US, while low oil prices boost growth in advanced markets in 2027,” global economists Claudio Irigoyen and Antonio Gabriel wrote to clients on Monday.
AI is slowly taking over consumer spending
From 2025 to 2026, AI has increased the growth of US domestic demand, taking over from the traditional leader – consumer spending – according to data published by the bank. That trend means it was pushed back in the third and fourth quarters of 2025, but in the first quarter of 2026, AI was far from the leader.
Where AI is booming, consumer spending has been dampened by war-driven energy prices in the first half of the year and slow US inflation that doesn’t appear to be going away – and that looks likely to push the US Federal Reserve to raise rates.
The US consumer picture is not all bad, BofA noted: “Prior to the deal, we were impressed by consumer resilience to the gas shock. But we were concerned about how long it would last, as tax-related fiscal stimulus, which served as an offset, had plateaued and real incomes were declining.”
Now, the bank sees “strong growth” in consumer spending during the second half of the year.
But its role in leading the economy – see 2024 and 2025 in the chart above – is losing ground in the AI investment cycle that has seen megacap tech leaders pour hundreds of billions of dollars into the endless race.
It’s also important to note: The forces driving AI in the economy are not limited to the US. Investment growth has benefited China’s export economy, where many machine parts are manufactured and shipped to global consumers, as well as emerging economies.
For an example of the latter, look no further than South Korea, where the Kospi Composite index (^KS11) has run up just shy of 100% since the start of the year. The index is heavily weighted in semiconductor stocks, helped by SK Hynix (000660.KS) and Samsung Electronics (005930.KS).
