Overview
The International Monetary Fund (IMF) has revised its global growth forecast for 2026 upwards, thanks to the boost from technological investments. However, it cautions that the impact of artificial intelligence (AI) and the resurgence of trade tensions could cause disruptions.
Global Economic Growth
The IMF stated in its update of the World Economic Outlook that global economic growth will remain stable over 2025, at 3.3% this year, which is 0.2 percentage points higher than previously forecasted.
The IMF warned that the resilience shown so far is largely due to a few sectors, indicating vulnerability. Although the global economy appears to be “moving past the 2025 trade disruptions and tariffs,” this does not mean they haven’t had an impact, according to the IMF’s chief economist, Pierre-Olivier Gourinchas.
Instead, challenges have been offset by “tailwinds from the AI boom and tech investments,” he explained to journalists. This was particularly evident in North America and Asia.
Latin America
The new outlook for Latin America predicts a growth of 2.2%, which is 0.1 percentage points less than previously forecasted.
Brazil, the region’s largest economy, is expected to grow by 1.6% in 2026, while Mexico, the second-largest GDP in the region, remains unchanged at 1.5%.
Tariffs and Inflation
The private sector demonstrated adaptability in 2025 to face trade shocks, while fiscal and monetary support provided a boost.
Since returning to the White House in January, U.S. President Donald Trump imposed broad tariffs affecting both allies and competitors, stirring markets and supply chains and escalating trade tensions.
However, the Trump administration subsequently closed tariff deals with several partners and secured a crucial trade truce with the world’s second-largest economy, China.
Global inflation is expected to drop from an estimated 4.1% in 2025 to 3.8% in 2026.
Uncertainty and AI Risks
The IMF stated that trade policy uncertainty remains significantly higher than in January 2025 and occasional problems could still arise, particularly in regions like Latin America.
The U.S. Supreme Court is expected to rule on the legality of Trump’s use of economic emergency powers to impose tariffs on nearly all trading partners.
A ruling is expected early in the year. The annulment of some tariffs “would inject another dose of uncertainty over global trade policy,” added Gourinchas.
Trump might resort to other legal avenues to reimpose tariffs, creating uncertainty. Moreover, the rise of AI driving the global economy comes with its own risks, according to Gourinchas.
There’s a possibility of a “market correction” if AI expectations for profitability, productivity, and gains don’t materialize.
A key driver of recent Wall Street records has been the bullish sentiment around artificial intelligence.
Divergence
The IMF estimates that the surge in technology investment and spending added around 0.3 percentage points to the average annualized GDP growth in the U.S. for the first three quarters of 2025.
This offset the drag from the prolonged government shutdown at year-end due to a budget impasse in Congress.
Gourinchas highlighted the divergence between the U.S., which is experiencing a jump in AI investment, and other advanced economies.
The IMF forecasts U.S. growth at 2.4% for 2026, 0.3 percentage points more than previously forecasted.
In contrast, it predicts a growth of 1.3% in the eurozone.
Growth in China and India is also “relatively solid” compared to other emerging markets, Gourinchas said.
Looking ahead, Gourinchas emphasized the need for central bank independence so they can fulfill their mandate of keeping inflation in check.
He didn’t comment on an ongoing U.S. Department of Justice investigation into Federal Reserve Chair Jerome Powell, but noted that the U.S. dollar’s relevance in the international monetary system makes it “even more crucial” for the Fed to carry out its work effectively.
Key Questions and Answers
- What is the IMF’s revised global growth forecast for 2026? The IMF has upped its global growth forecast for 2026 to 3.3%.
- What factors are contributing to this positive outlook? Technological investments and innovations, particularly in AI, are driving this growth.
- What risks does the IMF highlight? The IMF warns of potential disruptions from AI’s impact and resurging trade tensions.
- How does the IMF view Latin America’s economic prospects? The region is expected to grow by 2.2% in 2026, slightly less than previously forecasted.
- What is the outlook for global inflation? Global inflation is expected to decrease from an estimated 4.1% in 2025 to 3.8% in 2026.
- What uncertainties does the IMF point out? Trade policy uncertainty remains high, and occasional problems could arise, especially in Latin America.
- What are the risks associated with the rise of AI? There’s a possibility of market correction if AI expectations for profitability, productivity, and gains don’t materialize.
- How do advanced economies compare to emerging markets in growth? The U.S. is experiencing a jump in AI investment, driving its forecasted growth of 2.4% for 2026, while the eurozone is predicted to grow at 1.3%.
