The International Monetary Fund has released its World Economic Outlook update for January 2026, raising its global growth forecast as businesses and economies adapt to easing United States tariffs and a continued artificial intelligence investment boom drives productivity gains across major economies.
The IMF now projects global GDP growth at 3.3 percent in 2026, an increase of 0.2 percentage points from its October estimate. This matches the 3.3 percent growth projected for 2025, which also exceeded previous forecasts by 0.1 percentage points. The global crisis lender maintained its 2027 growth forecast at 3.2 percent, unchanged from earlier projections.
China's 2026 growth forecast has been upgraded to 4.5 percent, down from a stronger-than-expected 5.0 percent performance in 2025, but 0.3 percentage points higher than October estimates. The upgrade reflects a significant 10 percentage-point reduction in United States tariff rates on Chinese goods following recent trade negotiations between Washington and Beijing.
The euro zone received a modest upgrade, with growth now forecast at 1.3 percent for 2026, up 0.1 percentage points from the October estimate. The improvement is driven by increased public spending in Germany following its new coalition government's fiscal stimulus package, along with stronger-than-anticipated performances in Spain and Ireland.
Brazil emerged as a notable outlier in the otherwise positive update, receiving a 0.3 percentage point reduction in its 2026 growth rate to 1.6 percent since October. IMF officials attributed the downgrade largely to tighter monetary policy required to combat a flare-up in inflation that gripped Latin America's largest economy last year.
The Fund highlighted artificial intelligence as representing significant upside potential for the global economy. If the current AI investment surge leads to rapid adoption and productivity gains, global growth could be lifted by as much as 0.3 percentage points in 2026 and between 0.1 and 0.8 percentage points annually in the medium term, depending on the speed of adoption across different sectors and regions.
On the inflation front, the outlook remains encouraging. Global inflation is forecast to continue its decline from 4.1 percent in 2025 to 3.8 percent in 2026 and further to 3.4 percent in 2027, suggesting central banks are succeeding in their efforts to bring price pressures under control without triggering recessions in major economies.
The report noted that while some extremes of higher tariffs have been tempered through subsequent trade deals and diplomatic resets, the overall global economic environment remains volatile. Temporary factors that supported economic activity in the first half of 2025 are now fading, requiring sustained structural reforms and continued investment in emerging technologies to maintain growth momentum.