Economist Faris Hadidi said that the global economy faces a major crisis due to Iran's war, high inflation rates, and declining economic growth.

Hadidi added, in an interview with "Al Arabiya Business", that studies and economic fundamentals confirm that any inflation above 2% represents a distortion to the economy.

He explained that the International Monetary Fund raised its inflation forecasts for 2026 by 0.3 percentage points to 4.7% compared to April forecasts, with expectations of a decline to 3.9% during the next year.

He said that the IMF report indicated that the inflation problem has shifted from a temporary emergency issue to be dealt with, to a persistent crisis for about 5 years, exceeding the normal inflation stage.

Hadidi added that markets are trying to adapt to high inflation rates and weak economic growth indicators.

He explained that central banks are trying to combat inflation with all available policies, but these measures need a long period to achieve desired results.

Artificial intelligence sector

Hadidi said that the massive capital spending in the artificial intelligence sector helped compensate for the decline in economic growth rates due to the stagnation of other sectors.

He added that this spending is a double-edged sword, as it leads to new inflationary effects due to spending on infrastructure and a huge increase in energy demand, which led to higher energy prices.

He explained that spending on AI will not continue in the long term due to its current focus on infrastructure, and after completing infrastructure projects, spending will decline as spending shifts towards software.

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