Key Points
- The IMF forecasts steady global growth in 2026, buoyed by AI-related investment even as trade remains subdued.
- Investment in AI and digital infrastructure is helping offset sluggish trade and support productivity gains worldwide.
- Risks such as geopolitical tensions, market volatility and uneven country performance could still challenge the outlook.
The International Monetary Fund (IMF) said the global economy should grow steadily in 2026, with a surge in artificial intelligence (AI)-related investment and productivity helping to offset trade tensions and slowing consumption in some major economies. IMF economists noted that while trade and investment headwinds have moderated momentum in parts of Asia and Europe, AI-driven capital spending and rapid digital adoption are supporting an underlying expansion.
IMF staff said technology-led growth has ripple effects beyond tech sectors, as firms across manufacturing and services increase spending on data infrastructure, software and automation to stay competitive. The fund pointed to continued demand from businesses for AI-related equipment and expertise, a trend supported by healthy balance sheets and corporate earnings.
Despite positive signals from AI investment, the IMF highlighted that global trade volumes remain sluggish, weighed down by tariff policies and geopolitical friction. Slower goods exports in some advanced economies, partly tied to U.S. tariff actions and retaliation threats, have dampened trade growth. Sluggish investment in traditional industries is also tempering broader economic activity.
The IMF projects moderate inflation in most regions this year, as tighter labour markets ease and commodity prices stabilise. Emerging markets show varied inflation dynamics, with some facing persistent price pressures due to energy costs and currency shifts, even as others benefit from cheaper import bill effects.
Policymakers are weighing mixed signals, with the IMF urging authorities to support skills training, innovation ecosystems and infrastructure to sustain the productivity gains from AI adoption. These measures, the IMF said, could help lower structural unemployment and spread the benefits of technological progress more evenly across populations.
The IMF cautioned that risks remain, including possible financial market volatility and persistent policy uncertainty in major economies. Unexpected downturns in housing markets, credit tightening, or sharper geopolitical escalation could derail the steady growth outlook. The fund also noted that continued divergence in growth performance among countries could pose challenges for global demand.
Emerging economies with strong ties to global value chains — particularly those in East Asia and Latin America — are expected to grow moderately, supported by demand for exports and rising digital investment. Some countries, however, face headwinds from domestic financial imbalances and external debt vulnerabilities.
The IMF’s assessment underscores a delicate balance between innovation-driven growth and lingering structural constraints. While AI investment fuels optimism, broader economic resilience still depends on coherent policies on trade, labour markets and public investment. Analysts say the next few quarters will reveal whether AI catalysts can sustain long-term expansions in the face of persistent trade and geopolitical challenges.
