The International Monetary Fund raised its forecast for global economic growth in 2026 to 3.2% in its World Economic Outlook published on Tuesday, an upward revision of 0.1 percentage point from January’s assessment, citing stronger-than-expected performance in major emerging market economies including India, Indonesia and Brazil. However, the Fund issued stern warnings about the risks posed by increasing trade fragmentation, geopolitical tensions and the potential for financial market volatility triggered by divergent monetary policy paths across the major economies.
IMF chief economist Pierre-Olivier Gourinchas, presenting the report at a press conference in Washington, described the global economy as being in a state of “cautious equilibrium.” Growth was continuing, he noted, but it remained below the pre-pandemic trend rate and was increasingly concentrated in Asia, while advanced economies in Europe and North America faced a more challenging environment characterised by subdued investment, elevated debt levels and the ongoing adjustment from the post-pandemic inflation surge.
The United States was forecast to grow by 2.7% in 2026, revised upward by 0.2 percentage points from the January forecast, reflecting continued consumer spending resilience and strong performance in the technology sector. However, the Fund cautioned that the US administration’s tariff measures, which came into force in February 2026 and cover a broad range of goods imported from China, Europe and other trading partners, represented a significant downside risk to the global outlook if they were met with retaliatory action or prompted a broader retreat from multilateral trading arrangements.
The Euro area was forecast to grow by 1.1%, broadly unchanged from the January projection, with Germany continuing to struggle with the structural adjustment of its manufacturing-heavy economy to a world of higher energy costs and intensifying Chinese competition in key export markets. France and Spain performed more robustly, supported by strong tourism revenues and resilient domestic consumption, partially offsetting the drag from Germany.
China’s growth forecast was revised down marginally to 4.4%, reflecting continued weakness in the property sector and softer domestic consumption, despite significant government fiscal stimulus announced in the spring. The Fund noted that China’s structural transition from investment-led to consumption-driven growth remained incomplete and continued to pose risks to both the Chinese economy and global commodity markets.
For the United Kingdom, the IMF revised its 2026 growth forecast up to 1.5% following the strong first-quarter GDP data, though it cautioned that the forecast remained subject to significant uncertainty given the UK’s exposure to both US tariff policy and the pace of the domestic monetary easing cycle.
— Thomas Hargreaves, London Capital Post
