IMF slightly raises 2026 global growth outlook on brisk AI investment
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The IMF also attributed the upward revision to fiscal policy and lower interest rates, in addition to easing trade frictions between the US and China.
PHOTO: REUTERS
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The International Monetary Fund (IMF) on Jan 19 slightly raised its 2026 outlook for the global economy, citing soaring investment in artificial intelligence (AI) and waning trade tensions.
The IMF projected 3.3 per cent world growth in 2026, up from the 3.1 per cent it forecast in its previous key quarterly report, upgrading the outlook for the United States and many other countries, including China and Japan.
It also said global inflation is expected to fall steadily, moderating from an estimated 4.1 per cent in 2025 to 3.8 per cent in 2026 and 3.4 per cent the year after.
Still, “risks to the outlook remain tilted to the downside”, its latest report warned.
According to the report, financial markets and the global economy as a whole could easily be disrupted by factors such as diminished expectations for AI-driven productivity gains, geopolitical tensions and new trade wars between the US and the rest of the world.
The IMF maintained global growth forecast for 2027 at 3.2 per cent, reflecting financial and economic uncertainties.
According to the World Economic Outlook report, the US economy is expected to expand 2.4 per cent in 2026 – 0.3 percentage point higher than its October 2025 forecast
In addition to easing trade frictions between the US and China following a meeting between their presidents in late October in 2025, the IMF attributed the upward revision to fiscal policy and lower interest rates.
The trade truce, reached by US President Donald Trump and Chinese President Xi Jinping at the time to lower bilateral tariffs and suspend export controls for one year, has also been a boon for other countries.
While world trade has remained relatively strong, owing to an increase in technology-related exports, growth in advanced economies in 2026 is expected to stand at 1.8 per cent, up 0.2 point.
The IMF said the euro area’s economy is likely to grow 1.3 per cent in 2026 and Japan’s to expand 0.7 per cent, with both receiving a 0.1 point upward revision. However, their economies are projected to moderate from 2025’s estimated growth of 1.4 per cent and 1.1 per cent, respectively.
The Washington-based international organisation noted that the economic policies of Japan, Germany and the US are expected to be particularly stimulative in the short term. AFP
