The global economy continues to resist persistent geopolitical and trade tensions and is expected to perform better than anticipated in 2026, remaining at similar levels the following year, according to data released by the International Monetary Fund (IMF) on Monday.
In its latest update of the World Economic Outlook (WEO) report, the IMF predicts a growth rate of 3.3% for 2026 (up by 0.2 points from the initial estimate), in line with the trend of the past two years, before a slight slowdown to 3.2% in 2027.
“The global economy has recovered more quickly than we anticipated from trade disruptions due to tariffs,” pointed out the IMF’s chief economist, Pierre-Olivier Gourinchas, highlighting that other forces have balanced out the effects.
Meanwhile, global inflation is expected to continue to decrease, reaching 3.8% this year (up by 0.1 point) and 3.4% next year, with advanced economies nearing 2%.
However, uncertainties remain, particularly trade and geopolitical tensions, exemplified by threats of tariffs by Donald Trump on eight European countries opposing the U.S. annexation of Greenland.
“We have observed recent developments. We expected the situation to stabilize and normalize, but we see that we live in a world where trade tensions can arise, along with geopolitical tensions. This poses a downside risk to the global economy,” warned Mr. Gourinchas in an interview with AFP.
The implementation of tariffs “could lead to increased caution from businesses, a potential decrease in household consumption, and concerns among employees about their careers,” he cautioned, calling for a clear and predictable trading environment.
Another major risk highlighted by the IMF is the potential speculative bubble surrounding artificial intelligence (AI), especially “if the promises of productivity gains and profitability do not materialize,” Mr. Gourinchas told the press.
As it stands, the global economy is expected to sustain itself due to better-than-expected growth in the U.S. and China, with a lesser extent in the European Union (EU).
U.S. growth is forecasted to experience a slight rebound to 2.4% in 2026 (up by 0.3 points), following a 2.1% finish in 2025 based on initial data from the IMF. Investments in AI are playing a significant role in driving American growth.
In China, the anticipated growth for 2026 is also revised upwards to 4.5% (up by 0.3 points) but shows signs of slowing down after two years at 5%, with further deceleration projected for 2027 (expected at 4%).
The EU continues to display resilience, despite a challenging environment for the continent. European growth is projected to be slightly lower than 2025, at 1.3% compared to 1.4%, but the 2026 forecast is revised slightly higher from the October estimate (+0.1 point), particularly driven by the German and Spanish economies leading the way in Europe.
Spain is expected to be the most dynamic European economy, with growth forecasted at 2.3% (+0.3 points). Germany, on the other hand, seems to be emerging from several challenging post-Covid years and is expected to surpass 1% this year (1.1%, up by 0.2 points).
This acceleration is attributed to increased military spending and public investments, along with the delayed effects of monetary policy easing, explained IMF’s Deputy Research Director Petya Koeva Brooks. France is projected to see economic growth of 1% this year (up by 0.1 point) and a slight acceleration in 2027 to 1.2%, despite ongoing political instability leading up to the 2027 presidential election.