The International Monetary Fund (IMF) on Wednesday modestly downgraded its outlook for the world economy this year, citing the energy shock caused by the Iran war. But the fallout from the conflict is being partially offset by booming investment in artificial intelligence and other technologies.

The IMF now expects the global economy to expand by a sluggish 3% in 2026, down from 3.5% last year and from the 3.1% it had forecast for this year back in April, according to its latest World Economic Outlook report.

The fund expects worldwide growth to rebound to 3.4% next year.

Iran responded to U.S. and Israeli attacks Feb. 28 by shutting down the Strait of Hormuz, through which a fifth of the world’s crude oil and natural gas passes.

Energy prices soared, squeezing businesses and consumers. The IMF now expects oil prices to be up nearly 32% this year and for global consumer prices overall to increase 4.7% in 2026. That would be up from 4.1% in 2025 and would mean that two years of progress against inflation has stalled.

The IMF forecasts assume that the Strait of Hormuz reopens later this month – even though U.S. strikes on Iran resumed and President Donald Trump declared Wednesday that a cease-fire with Iran was over. They also assume that commerce through the strait returns to normal by next March.

Energy shock

“The world economy has weathered the shock from the war better than feared,” Petya Koeva Brooks, deputy director of the IMF’s research department, told reporters Wednesday.

The economic damage from the energy shock has been limited partly because countries could draw on existing oil stockpiles and because oil-exporting countries outside the Persian Gulf stepped up production.

Countries that produce and export their own energy and that benefit from AI investment are insulated from the war’s economic damage. Among them is the United States.

The IMF expects the U.S. economy – the world’s largest – to grow a solid 2.3% this year, up from 2.1% in 2025 and unchanged from the April forecast.

President Donald Trump’s 2025 tax cuts, big gains in productivity and a strong stock market are also giving the American economy a lift.

The 21 European countries that share the euro currency, hit hard by higher energy prices, are collectively forecast to grow just 0.9% this year, down from 1.4% in 2025.

China, the world’s No. 2 economy, is expected to expand 4.6% this year, down from 5% in 2026 but a bit faster than the IMF had expected in April.

Weighed down by higher energy prices and a property market collapse, the Chinese economy is getting offsetting help from public works spending, a surge in high-tech manufacturing and booming exports.

Türkiye outlook

In Türkiye, the IMF sees the economy growing by ​2.9% in 2026, down from 3.4% projected ‌in April.

That marks the second downward revision this year after it had already cut Türkiye’s forecast ​from 4.2% in its January outlook.

The IMF said it ​now expects Türkiye’s economy to grow 3.6% ​in 2027, slightly higher than the 3.5% forecast published in April.

The downgrade follows an earlier reduction in ​April, when the IMF cited weaker-than-expected ​economic activity and the impact of higher energy prices.

India is once again forecast to be the world’s fastest-growing major economy, advancing at a 6.4% clip, down from a sizzling 7.7% last year, on strong consumer spending.

The Daily Sabah Newsletter

Keep up to date with what’s happening in Turkey,
it’s region and the world.

SIGN ME UP

You can unsubscribe at any time. By signing up you are agreeing to our Terms of Use and Privacy Policy.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Air Canada on Wednesday appointed a new CEO to succeed Michael Rousseau, who announced his retirement after coming under criticism over his failure to issue condolences both in English and French after a fatal airport disaster.

Canada’s national carrier said Anko Van der Werff, currently the chief executive at Scandinavian Airlines (SAS), would take charge by the end of January 2027.

Van der Werff was chosen following “a comprehensive global search,” Air Canada said.

“The search considered a number of performance criteria, including the ability to communicate in French,” it added.

The incoming boss, who will also serve as president and sit on Air Canada’s board, said he was “mindful of the importance of serving Canadians in both official languages.”

Rousseau had sparked controversy by issuing an English-only video message to express condolences after a deadly collision late on March 22 between an Air Canada jet and a fire truck at New York’s LaGuardia Airport.

Canada has two official languages – English and French – and one of the pilots killed in the accident was from French-speaking Quebec.

Rousseau had issued an apology over his English-only message, regretting that he couldn’t express himself in French “despite many lessons over several years.”

Prime Minister Mark Carney – whose occasionally halting French was discussed when he entered politics last year – also said at the time that he was “disappointed” by Rousseau’s unilingual message.

Air Canada is the country’s largest airline and is headquartered in Montreal, Quebec – Canada’s traditionally French-speaking province. The company is required to offer services in both languages.

The Daily Sabah Newsletter

Keep up to date with what’s happening in Turkey,
it’s region and the world.

SIGN ME UP

You can unsubscribe at any time. By signing up you are agreeing to our Terms of Use and Privacy Policy.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Work is ​continuing with Türkiye and Italy regarding ⁠the ⁠SAMP-T air defense system, ​French President ​Emmanuel Macron said on Wednesday.

“We have work underway on a Franco-Italian basis, along with Turkey, which ⁠is ⁠technical work and which is continuing,” said Macron ⁠at the NATO summit in Ankara.

His remarks followed reports suggesting France is willing to consider a possible sale of SAMP-T to Türkiye following years of opposition, clearing the way for more substantive ⁠talks with Ankara.

The shift in position followed ⁠talks between French President Emmanuel Macron and Italian Prime Minister Giorgia Meloni during a summit on June 25.

Earlier on Wednesday, Macron met with Turkish President Recep Tayyip Erdoğan for talks on bilateral ties and regional and global developments, Türkiye’s Communications Directorate said.

During the meeting, Erdoğan said the time had come for Türkiye and France to raise their mutual trade targets, adding that Ankara would continue efforts to advance cooperation “in every field.”

Erdoğan also stressed the importance of strengthening NATO’s European pillar to preserve the “Transatlantic Bond” among allies, saying this could be achieved “without eroding our alliance ties and without causing unnecessary duplication.”

He added that Türkiye would support the EU’s defense initiatives on the basis of those principles.

Last week, Defense Minister Yaşar Güler said Türkiye was “evaluating all options” to boost its air defenses, including the potential purchase of Patriot systems from Washington ⁠or SAMP-T systems.

Güler said Ankara remained open to cooperation involving technology transfer and joint production. Technical and political talks with the relevant countries are taking place “from time to time,” he added.

Türkiye, France and Italy launched cooperation on a possible long-range air-defense program in 2017 to 2018, including studies into co-development and co-production.

However, the project stalled as ties between Ankara and Paris deteriorated over Syria, Libya and disputes in the Eastern Mediterranean involving Greece and Greek Cyprus.

The SAMP-T, also known as Mamba, is produced by the Franco-Italian Eurosam consortium, bringing together MBDA France, MBDA Italy and Thales.

The system can track dozens of targets simultaneously, intercept multiple threats at once and is the only European-made system that claims to be able to intercept ballistic missiles.

Often described ⁠as ⁠Europe’s closest counterpart to the U.S. Patriot system, it divides analysts on its efficiency, who point to its lack of combat use over the years.

Türkiye has NATO’s second-largest army and has for years been ramping up investments as it seeks to have its own fully fledged missile defenses. It is meanwhile producing components for its integrated, multilayered “Steel Dome” air defense system.

Beyond Paris and Rome, the SAMP-T has only been exported to Singapore, although it has been transferred to Ukraine in recent years and France deployed it to help the United Arab Emirates (UAE) defend itself against Iranian missile attacks this year.

Italy sent the system to Türkiye in mid-June as part of NATO defense planning.

Any deal would likely center around the new generation of the system, which is being rolled out to the French and Italian militaries.

While Italy has long been in ⁠favor of sharing the SAMP-T with Türkiye to deepen defense industry cooperation, Turkish officials have for years privately and publicly regarded France as the principal political obstacle to the program.

Momentum has returned over the past ⁠year as Ankara has intensified efforts to strengthen its missile defense capabilities amid regional instability and NATO allies have reassessed defense cooperation and capability needs.

The Daily Sabah Newsletter

Keep up to date with what’s happening in Turkey,
it’s region and the world.

SIGN ME UP

You can unsubscribe at any time. By signing up you are agreeing to our Terms of Use and Privacy Policy.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

U.S. President Donald Trump on Wednesday directed an immediate suspension of all trade with NATO ally Spain, escalating strains tied to defense spending and the Iran war despite European Union rules requiring trade negotiations to be conducted as ⁠a single bloc.

During a NATO summit in Ankara, which European leaders had hoped would put a lid on rifts within the military alliance, Trump instead reignited the dispute with Spain, calling Madrid a “terrible partner.”

He also irked another NATO ally Denmark by reiterating that his country should control Greenland. Denmark promised to defend every inch of its territory.

It was the second time Trump has instructed Treasury Secretary Scott Bessent to halt commerce with Spain over its refusal to commit to NATO’s new defense spending target of 5% of GDP. However, after his first such promise in March, trade between the two countries continued normally.

“Spain doesn’t agree to anything, and you ⁠shouldn’t ⁠carry them,” Trump told NATO Secretary-General Mark Rutte, who later tried to soothe the tension by saying that Spain “made a huge step last year” raising its spending to 2%, although he added that “there are still issues we have to solve.”

“I don’t want to do any trade with them, alright?” Trump said, turning to Bessent, who replied: “Yes, sir.” Trump then added, “Take it immediately. Don’t even talk to them. They’re hopeless. They’re bad people… They make so much money with us, and we’re going to see ⁠that they make a lot less.”

EU vows to protect member states’ interests

The office of Spanish Prime Minister Pedro Sanchez, who leads a minority leftist government, said in a statement it was treating Trump’s statements as “business as usual” and did not intend ​to change the “excellent” relations it enjoyed with Washington.

It pointed out that Spain had a trade ​deficit with the U.S. and that economic ties were forged by private companies rather than governments, adding that as part of the customs and trade union, individual EU ⁠members could ‌not be ‌singled out.

Later on Wednesday, the EU said it will “always ensure” the interests of member states are “fully protected.”

“We expect the U.S. to honor its commitments under that joint statement as we have honored ours,” EU trade spokesperson Olof Gill said, referring to a trade pact signed last year between Brussels and Washington.

“The ​Commission will always ensure that the ⁠interests ‌of the European ‌Union and all ⁠our member states ‌are fully protected. We will ​continue to advocate ⁠for stable, predictable ⁠and mutually beneficial trans-Atlantic trade for ⁠the ​benefit of all,” Gill added.

Trump has repeatedly expressed frustration with Spain after Sanchez, ⁠a Socialist, refused to let the U.S. use ‌its airspace or bases on its territory for the Iran war. Washington jointly operates with Madrid two key military ​bases in southern Spain for naval and ⁠air operations.

Spain is the world’s largest olive oil exporter ⁠and also sells auto parts, steel, and chemicals to the United States, although analysts consider it ⁠to be less vulnerable ​to Trump’s threats of economic punishment than other European economies.

Trump said he would air his grievances with fellow NATO allies at the leaders’ consultations at the summit on Wednesday, including his long-standing ambitions to acquire Greenland, adding that he was “very upset” with NATO allies over unequal defense spending and a lack of support on Iran.

The Daily Sabah Newsletter

Keep up to date with what’s happening in Turkey,
it’s region and the world.

SIGN ME UP

You can unsubscribe at any time. By signing up you are agreeing to our Terms of Use and Privacy Policy.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Oil prices rose almost 6% after U.S. President Donald Trump said Wednesday that the interim agreement with Iran is “over,” although he would allow discussions to continue.

Trump made the comments following U.S. strikes on Iran in reaction to attacks on three ships in the Strait of Hormuz. The price of Brent crude oil jumped 5.6% to more than $78 a barrel. U.S. benchmark crude surged 5.8% to $74.55 a barrel.

“For me, I think it’s over,” Trump responded when asked about the status of the ceasefire. “It’s just a waste of time dealing with them,” he said on the sidelines of the two-day NATO summit in Ankara, Turkey.

Crude prices had declined recently from spikes well above $100 a barrel to around the levels they were at before the war with Iran began in late February.

Iran and the United States agreed as part of their interim deal on ending the war to allow ships to pass through the strait without paying charges for 60 days. But Tehran has insisted it must control the vessels’ routes and vowed to later charge fees for passage. That would upend decades of practice in the waterway. The ships attacked Tuesday all appeared to be using a route close to Oman’s shore, rather than one ordered by Tehran.

The upsets for oil markets have coincided with waves of worries that the craze for artificial intelligence-related shares has pushed prices past the amount of gains in productivity and profits likely to result from massive investments in computer chip production capacity and data centers.

“As such, geopolitical headlines will likely determine market sentiment over the coming hours. A further deterioration in the situation could weigh further on equity valuations along with rising stress in technology,” Ipek Ozkardeskaya of Swissquote said in a commentary.

In share trading, Germany’s DAX shed 1.1% to 25,191.69 and the CAC 40 in Paris gave up 0.9% to 8,358.67. Britain’s FTSE 100 slid 0.8% to 10,579.09.

The future for the S&P 500 edged 0.1% lower and that for the Dow Jones Industrial Average was down 0.4%.

In Asian trading, Tokyo’s Nikkei 225 lost 2.1% to 66,819.05, while the Kospi in South Korea shed 5.4%, to 7,246.79.

The South Korean index has soared and then fallen back, briefly surpassing the 9,000 level last month and then succumbing to bouts of heavy selling of big AI-related tech shares like Samsung Electronics and SK Hynix. Samsung fell 6.3% early Wednesday after dropping about 7% the day before. SK Hynix shed early gains to drop 5.7%.

Taiwan’s Taiex rose 0.6%.

In Hong Kong, the Hang Seng rose 3% to 24,193.56.

Hong Kong traded shares of Chinese AI model startup Zhipu, known also as Z.ai and traded as Knowledge Atlas Technology, rose nearly 14% on Wednesday.

A six-month lock up period for “cornerstone” investors after its $558 million trading debut in Hong Kong in early January expires this week. State-owned China National Radio reported late Tuesday that nearly 70% of Zhipu’s cornerstone investors are committed to stay on, despite previous worries that the lock up period expiration could trigger a sell-off of shares. Zhipu’s share price has risen more than 1,300% since its January trading debut in Hong Kong.

The Shanghai Composite index declined 0.5% to 3,970.88.

Elsewhere in Asia, Australia’s S&P/ASX 200 shed 0.2% to 8,785.10, while India’s Sensex lost 0.7%.

On Tuesday, the roller-coaster ride for AI stocks whipped back down, dragging Wall Street lower.

The S&P 500 fell 0.4%, though the majority of stocks within the index rose.

The drops for stocks in the artificial-intelligence industry dragged the Nasdaq composite 1.2% lower, while the Dow Jones Industrial Average dropped 0.2%.

Advanced Micro Devices sank 6.5% and Intel shed 9.7%. Micron Technology lost 4.7%.

SpaceX, which owns the xAI business, fell 6.8% in its first day of trading after it was included in the Nasdaq 100 index .

In other trading early Wednesday, the U.S. dollar rose to 162.26 Japanese yen from 162.11 yen. The euro climbed to $1.1426 from $1.1414.

The Daily Sabah Newsletter

Keep up to date with what’s happening in Turkey,
it’s region and the world.

SIGN ME UP

You can unsubscribe at any time. By signing up you are agreeing to our Terms of Use and Privacy Policy.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Bao Zhang began driving for a Chinese ride-hailing app this year after losing his job as a software tester and says ​the weak job market gives him little hope of returning to the tech sector.

His story is increasingly common in China, where tens of millions are shifting from formal employment into the gig economy as meager unemployment insurance, record numbers of graduates and a shortage of jobs squeeze opportunities.

“Those ⁠who used to take taxis now have to drive them themselves,” said the 30-year-old, who ⁠works from 7 a.m. until nearly midnight in Beijing to earn about 6,000 yuan ($885) a month after vehicle rental and charging costs.

The China New Employment Forms Research Center, a think tank, estimates the number of people in flexible employment – without a permanent full-time contract – rising to 320 million this year from 280 million in 2025, a cohort almost as large ​as the U.S. population and about 44% of China’s workforce.

Gig economy acts as China’s safety net

Analysts say China’s gig economy has become ​a ⁠crucial employment buffer as the property crisis wipes out construction jobs and manufacturers shed workers through automation and cost-cutting amid tariffs, overcapacity and price wars.

Increasingly, it hires educated youth and white-collar workers squeezed by weak domestic demand and AI adoption.

“The proportion is extremely high,” said Yang Zhan, a cultural anthropology expert at the Hong Kong Polytechnic University. “It’s no longer limited to rural migrants and has spread to the middle class and university graduates.”

“China is upgrading manufacturing, and many industries that used to absorb large numbers of workers are being phased out. Then there is AI,” Zhan said.

China’s human resources ministry and the State Council Information Office, which answers media queries on behalf of the cabinet, did not immediately respond to comment requests.

As elsewhere, gig economy work mitigates the income shock of losing a formal job.

But in China, one government adviser said the rise of gig jobs – where social insurance contributions are not mandatory – heightens long-term risks to an inadequately funded welfare system.

A 2019 Chinese Academy of Social Sciences report warned that the national pension fund could run out by 2035 as the population ages. A 2024 update said delaying retirement could push depletion back eight to nine years.

“It may not be easy to find a solution,” due to unstable incomes and contracts in the gig sector, said the adviser, suggesting Beijing should support the formal services industry to create better jobs.

Growing burden

Central government transfers that plug social insurance budget gaps roughly ⁠trebled over ⁠the last decade to about 3 trillion yuan, doubling as a percentage of total expenditure to 10%, a Gavekal Dragonomics analysis showed.

A second government adviser said further taxing gig workers, many of them rural migrants, to reduce the burden, would be “highly unreasonable.” Birth subsidies could be a preferable long-term fix, he said.

Only two of the 12 flexible workers Reuters interviewed said they were voluntarily contributing, while two others said they paid through formal part-time jobs outside their gig work. The rest said they preferred to save on their own.

“I can take control, rather than wait for decades for others to pay me,” said Angel An, 24, who earns more than the average ride-hailing driver by promoting her services to tourists in Shanghai and nearby Suzhou on social media.

Zhang suffers recurring ankle and knee pain from long hours in traffic, but has chosen not to buy medical insurance, adding that pension felt “too far away” and would be small anyway.

Gig jobs lack the pay and security many Chinese expect, said HSBC Asia economist Frederic Neumann, warning this drags on consumption and growth.

“A whole new generation is growing up unaccustomed to the security and confidence that their ⁠parents for a long time enjoyed,” Neumann said.

Low participation

A December 2025 government report found that by end-2024 only 70.6 million flexible workers were enrolled in the urban employee pension scheme, which supplements basic retirement benefits. Most migrant workers contribute small amounts only to the basic scheme, where payouts can be as low as 163 yuan a month.

There are no estimates for how many gig workers pay into all social insurance schemes – pension, medical, work injury, unemployment, maternity and housing – but the numbers ​are likely much lower.

A Peking University survey of 30,000 delivery workers found fewer than 10% would support mandatory social security contributions, which would cost employees about 10% of their income and employers roughly a quarter.

“The ​urgent priority is to make it easier for flexible workers to be included in the employee social security system,” said Nomura’s chief China economist Ting Lu, who estimates only tens of millions are fully enrolled.

“We need to reduce anxiety,” he said, “so that they save less and consume more.”

Zhan, the anthropologist, said the government faced a tough trade-off between making the industry’s employers ⁠contribute more to needed welfare improvements ‌and preserving their ‌ability to create jobs.

“The government very much needs the platform economy to absorb workers,” and maintain social stability, Zhan said.

Significant regulatory changes could ⁠cause “a major shock” to the industry’s profits, she added.

Wage pressures

Although China’s unemployment rate has hovered around 5%-6% for a decade, gig ‌work has helped keep those numbers in check because anyone working even one hour a week is considered employed.

Yet an influx of gig workers is increasingly outpacing demand in some sectors, slowing incomes.

The think-tank report said China’s 16 million food delivery riders saw their ​income rise 11% on average to 37.3 yuan per hour in ⁠2025, but wages shrank 1.8% for the 37.2 million ride-hailing drivers.

At least four cities, including the tech hub of Shenzhen, have issued warnings of ride-hailing ⁠market “saturation” since April.

The second government adviser said authorities only meant to raise awareness and not to prevent people from taking more such work, as “that would become a social stability issue.”

Li, a cleaner in his ⁠early 50s who delivers food until 10 p.m. ​for an extra 40-100 yuan a day, suspects the growing number of riders is compressing earnings per order, but has “no choice” but to keep going.

“At my age, without education, what could I possibly do? In Beijing, most college students also have to deliver food,” said Li, who only gave his surname.