The International Monetary Fund (IMF) has revised its 2026 global growth projection upward, now anticipating an expansion of 3.3% for this year and next, before a marginal slowdown to 3.2% in 2027. The upgraded forecast comes as economies and companies adjust to recent changes in U.S. tariffs and benefit from continued strong investment in artificial intelligence, both of which are influencing asset values and boosting expectations for rising productivity.
The new projections were released before President Donald Trump’s latest warning of potential tariffs targeting eight European countries and the retaliation from the EU. Despite these threats, the IMF noted that many businesses have managed to navigate higher U.S. duties by restructuring supply chains, entering new trade agreements, and redirecting exports, particularly as China increasingly targets non-U.S. markets.
In its report, the IMF emphasized that global inflation is set to continue declining, with projections of 4.1% in 2025 easing to 3.8% in 2026 and reaching 3.4% in 2027. However, the path for U.S. inflation returning to target is expected to be more gradual. Significant risks to the forecast remain, with the IMF citing the possibilities of changing market expectations around technology and the potential for escalating geopolitical tensions. Such developments, it warned, could disrupt markets, impact supply chains, and affect commodity prices.
For the U.S., the IMF’s latest outlook sees growth at 2.4% in 2026, a 0.3 percentage point increase from its October estimates. This is attributed in part to substantial investments in AI infrastructure, including expansion in data centers, advanced AI chips, and power provisioning. In China, the 2026 projection stands at 4.5%, down from a stronger-than-expected 5.0% in 2025 but still 0.3 percentage points above previous forecasts.
The IMF cautioned that if the current pace of AI-driven investment continues, there is a risk of further upward pressure on inflation. Conversely, if expectations for productivity gains and profit growth from AI are not met, corrections in elevated market valuations could limit broader demand. Nonetheless, the IMF said that robust AI investment could provide meaningful upside if it leads to rapid adoption, spurring productivity gains and greater business dynamism.
