The International Monetary Fund (IMF) raised its 2026 global growth forecast on Monday, citing a surge in artificial intelligence (AI) investment and easing trade tensions as key drivers offsetting last year’s tariff disruptions.

In its latest World Economic Outlook, the IMF projects global GDP growth at 3.3% in 2026, up 0.2 percentage points from its October 2025 forecast. Growth for 2025 also exceeded expectations at 3.3%, reflecting the resilience of global economies in adapting to trade and tariff shocks.

IMF Chief Economist Pierre-Olivier Gourinchas noted that businesses have adjusted to higher U.S. tariffs by rerouting supply chains, while trade agreements have lowered some duties. China, meanwhile, has increasingly diverted exports to non-U.S. markets. The effective U.S. tariff rate is now estimated at 18.5%, down from 25% in April 2025.

The AI investment boom, particularly in the United States, has boosted growth expectations. The IMF raised U.S. GDP growth for 2026 to 2.4%, up 0.3 percentage points from October, thanks to major investments in AI infrastructure, including data centers and advanced AI chips. Spain’s growth forecast rose to 2.3%, while the UK remains at 1.3%.

Despite optimism, Gourinchas warned of downside risks. If AI-driven productivity gains fail to materialize, high market valuations could trigger corrections, dampening demand. Trade flare-ups, supply chain disruptions, and geopolitical tensions could also slow global growth.

China’s GDP is forecast to expand 4.5% in 2026, slightly below its 2025 performance of 5.0% but above October estimates. The upgrade reflects U.S. tariff reductions and increased exports to Southeast Asia and Europe. The IMF cautioned, however, that China may face further protectionist measures unless it develops a more balanced growth model focused on domestic demand.

In the eurozone, growth is projected at 1.3%, led by increased public spending in Germany and stronger performances in Spain and Ireland. Japan’s 2026 forecast received a small boost from fiscal stimulus, while Brazil’s growth was downgraded to 1.6% due to tighter monetary policy aimed at controlling inflation.

Globally, inflation is expected to continue declining, from 4.1% in 2025 to 3.8% in 2026 and 3.4% in 2027, providing central banks with room for more accommodative policies that could support growth.

The IMF noted that if AI adoption continues at its current pace, global GDP could rise 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 improvements in AI readiness and productivity gains.