Global growth is projected to remain resilient at 3.3 per cent in 2026 and at 3.2 per cent in 2027, rates similar to the estimated 3.3 per cent outturn in 2025, the International Monetary Fund (IMF) said in its World Economic Outlook update, published on January 19.

The forecast marks a small upward revision for 2026 and no change for 2027 compared with that in the October 2025 World Economic Outlook (WEO).

“This steady performance on the surface results from the balancing of divergent forces,” the IMF said.

Headwinds from shifting trade policies are offset by tailwinds from surging investment related to technology, including artificial intelligence (AI), more so in North America and Asia than in other regions, as well as fiscal and monetary support, broadly accommodative financial conditions, and adaptability of the private sector, it said.

Global headline inflation is expected to decline from an estimated 4.1 per cent in 2025 to 3.8 per cent in 2026 and further to 3.4 per cent in 2027.

The inflation projections are also broadly unchanged from those in October and envisage inflation returning to target more gradually in the United States than in other large economies.

Risks to the outlook remain tilted to the downside, the IMF said.

Reevaluation of productivity growth expectations about AI could lead to a decline in investment and trigger an abrupt financial market correction, spreading from AI-linked companies to other segments and eroding household wealth.

“Trade tensions could flare up, prolonging uncertainty and weighing more heavily on activity,” the report said.

Domestic political tensions or geopolitical tensions could erupt, introducing new layers of uncertainty and disrupting the global economy through their impact on financial markets, supply chains, and commodity prices.

Larger fiscal deficits and high public debt could put pressure on long-term interest rates and, in turn, on broader financial conditions.

“On the upside, activity could be further lifted by AI-related investment and eventually transform into sustainable growth if faster AI adoption translates into strong productivity gains and increased business dynamism.”

Activity could also be supported by a sustained easing in trade tensions, the IMF said.

Policies to foster stability and sustainably lift medium-term growth prospects require a keen focus on restoring fiscal buffers, preserving price and financial stability, reducing uncertainty, and implementing structural reforms without further delay, it said.