IMF Increases Global Growth Forecast Amid AI Boom and Lower Tariffs

TLDR

• The IMF increased its 2026 global GDP growth forecast to 3.3%, citing improved trade conditions and AI-driven productivity.
• U.S. tariff rates dropped from 25% to 18.5%, helping businesses reroute supply chains and maintain global trade flow.
•  Strong investment in AI infrastructure has pushed up U.S. growth projections to 2.4% and lifted Spain’s to 2.3% for 2026.
•  China’s 2026 growth forecast was upgraded to 4.5%, helped by lower U.S. tariffs and shifting exports to new markets.
• Global inflation is expected to decline from 4.1% in 2025 to 3.4% in 2027, allowing more flexible monetary policies.

The International Monetary Fund (IMF) has raised its 2026 global GDP growth forecast to 3.3%, citing easing U.S. tariffs and the ongoing AI investment surge. The new projection marks a 0.2% increase from the previous estimate in October.

IMF’s 2026 and 2025 Global Growth Projections

According to Reuters report, the IMF’s World Economic Outlook update forecasts global growth at 3.3% in 2026, a revision from October’s estimate. This includes a 3.3% growth projection for 2025, which also surpasses prior forecasts by 0.1%.

IMF Chief Economist Pierre-Olivier Gourinchas emphasized that the global economy is adapting well to tariff disruptions and is now surpassing earlier predictions made before the trade conflicts began. Gourinchas explained that businesses have adapted to U.S. tariff hikes by adjusting supply chains and exploring new markets.

This adaptability, combined with trade agreements reducing duties, has allowed for a smoother transition despite previous disruptions. The U.S. tariff rate is now 18.5%, down from 25% in the IMF’s April 2025 forecast, further boosting global economic confidence.

U.S. and Global Economic Growth Fueled by AI

The IMF revised U.S. growth in 2026 to 2.4%, up 0.3 percentage points from the October forecast. This rise is largely due to a surge in investment in artificial intelligence (AI) infrastructure.

AI-driven projects, particularly in data centers and powerful AI chips, are expected to bolster U.S. productivity and economic output. For 2027, the IMF’s U.S. growth forecast was slightly downwardly adjusted to 2.0%.

Meanwhile, Spain’s 2026 GDP forecast was raised by 0.3 percentage points to 2.3% due to robust AI investment, while the IMF kept the UK forecast unchanged at 1.3%. Gourinchas cautioned that the rapid pace of AI development could trigger inflationary pressures, though the technology also holds significant potential for global economic upside.

Geopolitical Risks and China’s Economic Growth

The IMF revised its 2026 China growth forecast to 4.5%, reflecting reduced U.S. tariffs and increased exports to non-U.S. markets. However, the IMF warned that China must shift towards a more balanced growth model, reducing reliance on exports and increasing domestic demand.

The forecast upgrade for China accounts for a 10% reduction in U.S. tariffs for a year. Despite the positive trade effects, the IMF remains cautious about the potential for protectionist policies to affect China’s future economic trajectory.

The organization reiterated that geopolitical tensions and trade disruptions still pose risks to global growth. The IMF’s report concluded with a prediction of continued global inflation declines, projecting rates to fall from 4.1% in 2025 to 3.4% by 2027. The ongoing decrease in inflation will allow for more accommodative monetary policies globally, supporting continued growth.

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