The IMF forecasts stable growth of the world economy for 2026, but warns of trade and geopolitical risks

IMF Still Sees Stable Growth, but Driven by Very Different Forces

The latest update of the International Monetary Fund’s World Economic Outlook brings a message that at first glance seems encouraging: the global economy in 2026 should maintain a solid pace of growth. The IMF estimates that world GDP will grow by 3.3 percent this year, which is slightly higher than the fund expected in October 2025, while for 2027 it forecasts growth of 3.2 percent. Still, behind those figures there is no uniform improvement, but rather a very uneven picture in which the resilience of part of the large economies collides with persistent pressures from trade tensions, geopolitical risks, and still fragile public finances. In short, the global economy is still growing, but it is growing on uneven ground and with increasingly visible differences among regions, sectors, and countries.

The IMF’s central message is that the world economy has so far withstood more shocks than had been expected. The fund states that technological investment, especially that related to artificial intelligence and information technologies, continues to support business activity, above all in North America and parts of Asia. In addition, easier monetary conditions, fiscal support in certain countries, and the adaptability of the private sector have softened the effects of the trade changes that marked last year. But at the same time the IMF warns that this resilience must not be mistaken for security: part of the growth rests on a narrow set of drivers, and any more serious disturbance in financial markets, trade, or geopolitics could quickly change sentiment.

Growth Exists, but It Is Not Distributed Equally

The largest part of the upward revision for 2026 relates to the United States and China, the two economies without which it is impossible to understand today’s global picture. The IMF now expects the US to grow by 2.4 percent in 2026, after an estimated 2.1 percent in 2025, citing technological investment, fiscal support, and the gradual weakening of the negative effect of higher trade barriers as supports. In China, growth of 4.5 percent is expected for 2026, with an estimated 5 percent in 2025, which shows that the slowdown is continuing, but with milder intensity than had previously been forecast. India remains among the fastest-growing major economies with a projection of 6.4 percent, while the euro area still shows significantly more modest momentum, with growth of 1.3 percent in 2026 and 1.4 percent in 2027. This confirms that the same global trends do not produce the same effects: the technological cycle and easier financial conditions give some a strong boost, while others still carry the burden of old structural weaknesses.

This is particularly visible in Europe. The IMF estimates that the European economy is not participating in the technological investment momentum to the same extent as the US, and some euro area members are still feeling the longer-lasting consequences of the energy shock after Russia’s invasion of Ukraine. Germany, Europe’s largest economy, according to that estimate should grow by 1.1 percent in 2026 after a very modest 0.2 percent in 2025. France is projected at 1 percent, Italy at 0.7 percent, while Spain stands out with somewhat stronger growth of 2.3 percent. The euro area itself thus remains an example of a space in which inflation is significantly calmer than in previous years, but weaker productive momentum still limits a faster recovery.

The Technological Wave as the Main Support, but Also a New Source of Vulnerability

One of the most important emphases of the current report is the role of investment in artificial intelligence, semiconductors, data infrastructure, and other information technology. The IMF openly states that this investment wave is precisely one of the key reasons why global growth has remained above earlier expectations. In the United States, IT investment, according to the fund’s estimate, has reached the largest share in GDP since the beginning of the century, and positive spillover effects were also felt in Asia through exports of semiconductors and other technological equipment. In other words, part of the world is growing today because companies and markets believe that artificial intelligence and automation will bring a new leap in productivity.

But this is precisely where the IMF also sees one of the biggest risks. If it turns out that the expected returns from artificial intelligence will not arrive at the speed that markets are currently pricing into stock prices and investment plans, a sharp correction could occur. The fund warns that a reassessment of overly optimistic expectations could hit not only technology companies but also the broader financial market, households, and the investment cycle. Particularly sensitive is the fact that part of the technological expansion is increasingly relying on debt, so any fall in confidence would not be only a stock-market story, but also a matter of broader financial stability. In that sense, optimism about artificial intelligence acts as an engine of growth, but also as a concentrated source of risk.

Trade Tensions Have Not Disappeared, They Have Only Been Temporarily Eased

Although the IMF has slightly raised its growth forecast, the tone of the report is by no means triumphalist. The fund explicitly states that trade tensions have eased compared with the most tense period of 2025, but also that uncertainty remains significantly higher than at the beginning of last year. The report states that some tariff measures have been eased or postponed, including the temporary reduction of part of the bilateral tensions between the US and China, but the overall picture is still marked by a high level of uncertainty, partial agreements, and limited transparency of some trade arrangements. This means that companies and investors are still operating in an environment in which it is difficult to plan in the long term.

The World Bank sends a similar message. In its January report Global Economic Prospects, it estimated that global growth in 2026 will amount to 2.6 percent, after an estimated 2.7 percent in 2025, with a noticeable slowdown in global trade after last year’s stockpiling ahead of higher tariffs. According to that analysis, trade in goods and services should slow to 2.2 percent in 2026, from 3.4 percent in 2025. The IMF’s and the World Bank’s figures are not the same, which is usual because the institutions use different models and technical assumptions, but the message is fundamentally similar: the world is not in recession, but the trade regime remains an important drag that limits stronger growth.

Inflation Is Easing, but It Is Not Falling at the Same Speed Everywhere

Another reason why the forecasts for 2026 are somewhat more stable is the expectation of further easing of inflation. The IMF estimates that global inflation will fall from 4.1 percent in 2025 to 3.8 percent in 2026, and then to 3.4 percent in 2027. In a larger number of economies, inflation is approaching the target levels of central banks, which opens room for easier monetary conditions than during the most intense phase of the fight against rising prices. However, the fund warns that US inflation is returning toward target more slowly than in other major economies, which means that US monetary policy could remain more cautious and restrictive for longer than markets would like.

In the euro area, according to the IMF’s estimate, inflation in 2026 is moving around 2 percent, while in China it should begin to rise from low levels. For developing economies such a picture is important because lower interest rates and calmer inflation reduce financing costs and somewhat ease debt servicing. But at the same time high global indebtedness, especially public debt, remains a serious problem. In a separate financial stability update, the IMF warns that global public debt by the end of the decade could exceed 100 percent of world GDP, and the increasing reliance on short-term financing raises vulnerability to future market shocks.

Geopolitics Can Still Reverse Sentiment

However decent the current figures may seem, the greatest weakness of the current outlook for the world economy lies in the fact that several negative risks can act simultaneously. The IMF warns of the possibility of a renewed escalation of geopolitical tensions, disruptions in supply chains, and spikes in commodity prices. In such a scenario, trade barriers and political uncertainty would not only slow exchange, but would spill over into financial markets, investment, and consumption. Particularly sensitive is the combination of high prices of key raw materials, elevated government deficits, and possible growth in long-term interest rates.

The United Nations also warns of a similar problem. In the report World Economic Situation and Prospects 2026, the UN forecasts global economic growth of 2.7 percent in 2026, slightly lower than in 2025, while assessing that resilience exists, but that global growth is still weaker than the pre-pandemic average. The UN particularly points out that subdued investment, limited fiscal space, and persistent uncertainty are the reasons why the world economy could remain on a more prolonged path of slower growth. This broader picture is important because it shows that the current optimism about 2026 is not the same as a return to a strong and evenly distributed global upswing.

Developing Economies Continue to Bear a Greater Burden

For developing countries, the problem is not only the growth rate, but also the quality of that growth and its ability to reduce poverty, create jobs, and stabilize public finances. The World Bank warned that one in four developing economies is still poorer than in 2019, that is, before the pandemic. This means that even the multi-year resilience of the global economy has not automatically been translated into tangible progress for a large number of societies. If large systems such as the US, China, and India are keeping the world average afloat, that still does not mean that the same recovery is visible in all regions or that it is equally distributed among the population.

That is precisely why, in its recommendations to governments, the IMF does not speak only about maintaining growth, but also about rebuilding fiscal buffers, preserving price stability, strengthening financial supervision, and implementing structural reforms. The message is clear: countries that today place all growth on the technological cycle, cheaper financing, or a temporary trade respite risk being caught unprepared by the next shock. And this is not only about advanced economies. For many less developed countries, the question of debt, the cost of capital, and access to investment remains crucial for stability, perhaps even more than one decimal point in the global projection itself.

The Numbers Are Better, but Fragility Has Not Disappeared

When all is said and done, the IMF’s latest update truly is mildly encouraging for 2026. The world economy has not fallen into a deeper slowdown, inflation is generally calming, and the technological investment cycle for now continues to keep part of global activity at a higher level than expected. But equally important is what lies behind that headline: growth is not broadly distributed, European momentum remains weak, trade tensions have not been resolved but only temporarily eased, and much of the optimism relies on the assumption that artificial intelligence and related investment will indeed produce longer-lasting productivity growth.

That is why the most accurate description of the current situation is neither euphoria nor alarmism. The global economy is entering 2026 in better condition than many had expected a few months ago, but without a firm guarantee that the current resilience will last. The IMF’s figures provide a reason for cautious optimism, while warnings about trade, debt, market corrections, and geopolitics remind us that the world economy remains stable only to the extent that its main supports are stable. And it is precisely those supports, from the technology sector to international trade, that remain exposed to sudden changes.

Sources:

• International Monetary Fund – January update of the World Economic Outlook for 2026, with the baseline forecast of global growth, inflation, and major risks link
• International Monetary Fund – full PDF report with projections for the world, regions, and major economies, including the US, China, the euro area, and India link
• International Monetary Fund – official blog with additional explanation of the role of technological investment, artificial intelligence, and market risks link
• World Bank – January report Global Economic Prospects 2026 and estimates on the slowdown in trade and the resilience of global growth link
• World Bank – Global Monthly, January 2026, with a summary of movements in global trade, tariff effects, and financial conditions link
• United Nations – World Economic Situation and Prospects 2026, an overview of global prospects with an emphasis on slower long-term momentum and fiscal constraints link