The world economy is likely to remain resilient this year despite President Donald Trump’s protectionist trade policies, driven mainly by heavy investment in artificial intelligence by companies in North America and Asia, the International Monetary Fund said in a report on Monday.
According to the IMF report, global economic growth is expected to reach 3.3% in 2026 and 3.2% in 2027 from an estimated expansion of 3.3% in 2025. The outlook for 2026 has been revised up by 20 basis points from the October forecast, while the projection for 2027 remains unchanged.
The world economy “continues to show remarkable resilience despite significant US-led trade disruptions and heightened uncertainty,” IMF Chief Economist Pierre-Olivier Gourinchas and his colleague Tobias Adrian wrote in a blog post accompanying the fund’s latest World Economic Outlook update.
What promotes growth?
This “surprising strength” reflects an interplay of factors, including easing trade tensions, higher-than-expected fiscal stimulus, accommodative financial conditions, private sector agility in mitigating trade disruptions and better policy frameworks, particularly in emerging market economies, the blog post read.
The U.S. economy is benefiting from companies investing in technology at the strongest pace since 2001. The IMF now sees the economy growing by 2.4% from earlier forecasts and higher than the 2.1% growth expected for 2025.
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China, the world’s second-largest economy, is expected to grow 4.5 percent, an improvement on the 4.2 percent the IMF forecast in October, partly due to easing trade tensions with the United States after America cut tariffs on Chinese exports.
Meanwhile, India, which has overtaken China as the world’s fastest-growing major economy, is expected to grow more slowly. After last year’s 7.3% expansion, boosted by an unexpectedly strong second half, growth is expected to slow to a still solid 6.4% in 2026.
Risks to the outlook
Looking ahead, the IMF also warned that there are still more risks than positives. If expectations of how much AI can boost productivity are lowered, investment could fall and stock markets, which are now heavily influenced by big tech companies, could see a correction.
Ongoing trade disputes, geopolitical tensions and high levels of public debt could also weigh on growth and financial stability, the blog post said.
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On the other hand, faster and wider adoption of AI could lift productivity and support stronger medium-term growth, while a sustained easing of trade tensions could improve policy and investment predictability.
The IMF further urged governments to adopt policies that restore fiscal buffers, keep prices and markets stable, reduce uncertainty, and implement structural reforms to support stable and sustained economic growth.
