The global economy is expected to maintain steady momentum in 2026 despite lingering trade challenges, according to the latest outlook. The International Monetary Fund projects global growth at 3.3 percent for the year, reflecting an upward revision from its previous estimate. The IMF also expects global output to expand at the same pace in 2025, showing stronger resilience than earlier forecasts. This improvement highlights how economies have adjusted to shifting trade conditions and easing tariff pressures.
A key driver behind the improved outlook is sustained investment in artificial intelligence. Businesses across major economies continue to invest in data centres, advanced chips, and digital infrastructure. As a result, productivity expectations have strengthened, while asset values have remained elevated. The IMF believes that faster AI adoption could lift global growth by up to 0.3 percentage points in 2026. Over the medium term, gains could range between 0.1 and 0.8 percentage points annually, depending on adoption speed and readiness levels.
Despite these gains, risks remain present. The IMF warns that excessive optimism around AI could fuel inflation or trigger market corrections if productivity gains fail to materialise. At the same time, trade-related pressures have eased compared to early 2025. Several trade agreements reduced tariff rates, while businesses adapted by rerouting supply chains and expanding access to alternative markets. China, in particular, shifted exports toward Southeast Asia and Europe, helping offset weaker demand from the United States.
Regionally, the United States is forecast to grow by 2.4 percent in 2026, supported by strong AI-driven investment. Growth is expected to slow slightly in 2027 as stimulus effects moderate. China’s economy is projected to expand by 4.5 percent in 2026, reflecting a slowdown from 2025 but still exceeding earlier estimates. The IMF has urged China to strengthen domestic demand to reduce reliance on exports and avoid future trade tensions.
The eurozone is expected to grow by 1.3 percent in 2026, supported by higher public spending and solid performance in select economies. Japan also received a modest upgrade due to fiscal stimulus measures. Brazil, however, saw its growth forecast reduced to 1.6 percent as tighter monetary policy weighed on activity.
Inflation is expected to continue easing globally. The IMF forecasts inflation at 3.8 percent in 2026 and 3.4 percent in 2027. This decline could allow central banks to adopt more supportive monetary policies, helping sustain growth while managing remaining global risks.
