AI and trade barriers pose risks to a robust global growth outlook - IMF

The International Monetary Fund (IMF) has slightly raised its global economic growth forecast for 2026. However, risks are increasing, including due to the concentration of investments in the technology sector and the negative effects of trade disruptions that may accumulate, the world's largest financial organization warned.

The IMF reported in a review of the world economy published on January 19 that it now expects it to grow by 3.3% this year instead of 3.1% forecasted in October. The forecast for 2027 remained unchanged - global GDP will add 3.2%. At the same time, the fund warned that fears of a bubble in artificial intelligence, as well as trade and geopolitical tensions pose a threat.

"The current technology boom poses important risks [to the outlook] both upward and downward for the global economy. In a positive scenario, AI may begin to meet productivity growth expectations. [...] In a negative scenario, AI companies may not deliver returns commensurate with their high market valuations, and investor sentiment could deteriorate," Pierre-Olivier Gourinchas, IMF chief economist, and Tobias Adrian, director of the IMF's Monetary and Capital Markets Department, wrote in a blog post on the fund's website.

If hopes for productivity growth from new technologies fail to materialize, it could trigger a market crash that would spill over to other sectors and reduce the welfare of citizens, the IMF said. The impact of duties and uncertainty should subside in 2026-2027, but if new trade disputes erupt and more countries adopt a protectionist stance, it threatens to reduce corporate profits and price pressures for a long time, the fund fears.

The IMF estimated U.S. economic growth in 2026 at 2.4%, 0.3 percentage points (p.p.) above its October forecast. The revision is partly due to strong momentum from large-scale infrastructure investment in AI, Reuters writes. The IMF lowered its 2027 GDP forecast slightly by one-tenth of a percentage point to 2%.

The IMF expects China's GDP to grow by 4.5% in 2026. This is below the 2025 figure, which exceeded expectations (5%), but 0.3 p.p. above the fund's October estimates. The improvement in the forecast reflects the reduction of U.S. duties on Chinese goods, as well as the continued reorientation of China's exports to other markets, in particular, Southeast Asia and Europe.

The forecast of the eurozone economy growth for the current year has been raised by 0.1 p.p. against the October estimate - up to 1.3%. The reasons for the revision were the increase in government spending in Germany, as well as strong performance of Spain and Ireland. Estimates of GDP growth in the eurozone for 2027, the fund kept at 1.4%, noting that the effect of the planned European countries to increase defense spending will manifest itself in the "following years".

Expectations for Japan for 2026 were also slightly improved on the background of fiscal stimulus from the new government. As Reuters notes, Brazil was the "notable" exception: its economic growth forecast for 2026 was lowered by 0.3 p.p. compared to October, to 1.6%. The IMF linked the deterioration of the forecast to the tightening of monetary policy, necessary to combat last year's surge in inflation.

This article was AI-translated and verified by a human editor