The IMF Just Upgraded Its 2026 Growth Forecast - and AI Is a Big Reason Why

As trade tensions eased from last year’s peak, another major growth driver kept running hot: AI investment. The International Monetary Fund, or IMF, says that the world economy is still growing at a steady pace - and it’s doing better than the Fund expected a few months ago.

So what does the IMF actually see when it looks past the headlines - and what does “steady growth” really mean in a world of tariffs, rate cuts, and AI hype? Let’s break it down.

The Forecast, in One Minute

The IMF now expects global GDP growth to land at 3.3% in both 2025 and 2026, before easing slightly to 3.2% in 2027.

That’s a small upgrade, but it’s meaningful. It signals that the IMF sees the global economy as more resilient than it did back in October.

Why the IMF Feels More Confident This Time

In early 2025, concerns peaked that higher U.S. tariffs would significantly hamper global trade and dampen growth. Instead, the IMF says the world found ways to adapt.

1) Trade is still a headwind - just not as heavy

The IMF says businesses have adjusted to higher US tariffs by changing where they source and sell goods. Some of the new trade agreements have reduced certain duties, softening the impact of earlier tariff hikes.

In other words: tariffs didn’t vanish, but the disruption hasn’t derailed growth the way many feared.

2) AI investment is doing a lot of the lifting

The IMF points to a wave of spending tied to AI infrastructure - think data centres, chips, and the energy needed to run it all.

That’s one reason the IMF upgraded its 2026 US growth forecast to 2.4%. It also notes stronger momentum in parts of Europe (including Spain), and even China gets a modest upgrade for 2026 to 4.5%,. That’s partly due to reduced tariff pressure, for now, and exporters diversifying into new markets.

AI Can Lift Growth - But It Can Also Jolt Markets

The IMF is optimistic about what AI could do if productivity really improves: faster output, more innovation, more efficient businesses.

But it also flags a key risk: if today’s lofty expectations for AI-driven profits fail to materialise, financial markets could reprice quickly.

If AI turns out to be less transformative than the market hopes, expensive tech valuations can drop - and that can spill over into the rest of the market through confidence and spending.

So AI is both a tailwind for growth, and a potential “mood swing” trigger for markets.

Inflation Is Cooling, Which Helps Everyone Breathe

The IMF expects global inflation to keep drifting down: from 4.1% in 2025 to 3.8% in 2026 and 3.4% in 2027.

That matters because lower inflation gives central banks more room to ease up over time - and a less aggressive rate environment tends to support both growth and markets.

What This Means for Your Investing Life

If the last year has made the global economy feel fragile, this is a reminder that messy headlines don’t automatically mean the system stops working.

So the move isn’t to “pick the perfect prediction.” It’s to build a portfolio that can live through different outcomes:

• Stay diversified (across regions and sectors)
• Let tech exposure be part of your portfolio - not the whole story
• If markets swing on AI optimism changing direction, remember: you don’t have to react to every mood shift

Because your portfolio shouldn’t move on every headline. It needs to support your future - and steady, diversified investing is still one of the most powerful ways to protect it while the world keeps changing.

‍