Such a downturn could spill into the economy if falling markets cause consumers and businesses to cut back on spending, he said.

The IMF estimates that increased investment in AI and technology added about 0.3 percentage points to average annual US economic growth in the first three quarters of 2025. This helped offset the economic impact of a lengthy US government shutdown later in the year.

Gourinchas noted a growing gap between the US, where AI investment is surging, and other advanced economies. The IMF now expects US growth of 2.4 percent this year, while growth in the euro area is forecast at 1.3 percent, with Japan expected to grow more slowly.

China and India are also seeing relatively strong growth compared with other emerging markets, the IMF said, with most of the recent upward revision in global growth driven by the US and China.

"For 500 years, basically the West,  meaning Europe and the United States, were in charge. They were in charge through imperialism. They were in charge of world finance. They were in charge of the world economy," Sachs told Global South World.

According to Sachs, the legacy of colonial domination, from the Atlantic slave trade to late-19th-century African colonisation, left enduring economic scars. But now, he argues, that era is ending,  not by design, but by global shifts in power and technology .

“Finally, this Western system is ending,” he remarked, adding, “And I say finally because it was not a fair system. It was not a just system. It was not an ethical system. It was a system of power.”

The current shocks, marked by the United States’ reintroduction of tariffs , intensifying geopolitical rivalries, and sanctions that have shaken the post-World War II economic order, have left many developing nations in economic limbo. But Sachs insists this is also a time of unprecedented opportunity.

“Power is now more diffused, more shared, across more parts of the world than has been true for centuries,” he noted.

He cited the growing influence of China and India as examples of the shifting balance and called for the African Union to rise as a unified global force, pushing for fairer systems of trade, finance, and governance.

“Technology is spreading, economic development is spreading. The world is online everywhere, even in remote villages — though not equally yet,” he noted.

In this new world order, Sachs says the path forward for the Global South lies in unity, investment in technology and education, and a firm demand for inclusion in shaping international policy .

However, the IMF expects growth to rebound to 4.2% in 2026, driven by stronger investment and improving global conditions.

The updated outlook comes as part of the IMF’s global economic update , which reflects weaker-than-expected international trade dynamics, including new U.S. tariffs and an increasingly uncertain geopolitical environment.

Despite the overall slowdown, several countries in the region are expected to remain strong performers. Senegal, Ethiopia , and Côte d’Ivoire are forecast to post the highest growth rates in sub-Saharan Africa this year, underpinned by infrastructure investment, services expansion, and relatively stable political environments.

Meanwhile, Africa’s oil-exporting nations are expected to grow slower, averaging 2.7%, as global oil demand shows signs of softening. Nigeria, the region’s largest oil producer, is projected to grow by 3%, though this marks a 0.2 percentage point downward revision from previous forecasts due to falling oil prices and demand concerns.

Equatorial Guinea is likely to face the steepest contraction, with its economy expected to shrink by 4.2% this year, reflecting structural weaknesses and declining hydrocarbon output.

In  South Africa , the continent’s most industrialised economy, growth remains subdued at 1%, held back by persistent power shortages, policy uncertainty, and weak private investment.

The IMF warned that political instability and conflict remain “pronounced” risks to the region’s economic outlook. Rising food and energy prices, in particular, continue to weigh heavily on vulnerable economies with limited fiscal flexibility.

“Rising food and energy prices have had a severe impact on vulnerable nations with limited fiscal space,” Semafor quotes.

The IMF further urged policymakers in the region to prioritise fiscal discipline, investment in human capital, and governance reforms to build resilience in the face of global shocks.