WASHINGTON, DC — THE International Monetary Fund (IMF) is projecting moderate global economic growth of 3.3 percent in 2026, followed by a slight slowdown to 3.1 percent in 2027, even as shifting trade policies continue to pose risks to the outlook.
In its January edition of the World Economic Outlook, released during a media engagement in Brussels, the IMF noted that the global economy has shown resilience in the face of heightened uncertainty, particularly from recent trade disruptions. These headwinds, the Fund said, have been partly offset by strong investment linked to technological advancements, including artificial intelligence (AI), especially in North America and Asia, along with supportive fiscal and monetary policies and broadly accommodative financial conditions.
“Global activity continues to show notable resilience despite significant trade disruptions and heightened uncertainty,” said Pierre-Olivier Gourinchas, Director of the IMF’s Research Department. “According to our latest projections, global growth will hold steady at 3.3 percent this year, an upward revision of 0.2 percentage points compared to our October estimates, with most of the improvements accounted for by the United States and China.”
Gourinchas noted that the IMF has revised its growth projections upward several times since April last year, as the global economy appears to be absorbing the initial shock from tariff-related disruptions more quickly than expected. Growth prospects for both 2025 and 2026 are now stronger than those projected in October 2024, prior to the escalation of trade tensions.
The IMF said this resilience reflects a balance of opposing forces. While trade tensions remain a significant source of instability, recent developments have shown that other factors — including private-sector adaptability and strong technology-driven investment — have helped cushion the impact.
On inflation, the Fund projects that global headline inflation will decline from an estimated 4.1 percent in 2025 to 3.8 percent in 2026, before easing further to 3.4 percent in 2027. These projections are unchanged from the October outlook and suggest that inflation will return to target more gradually in the United States than in other major economies.
For countries such as St. Kitts and Nevis, which import a significant portion of their food and consumer goods, easing global inflation could provide some relief from elevated import costs that have weighed on domestic prices in recent years.
Despite the generally positive outlook, the IMF cautioned that risks remain tilted to the downside. Growth, the Fund noted, is increasingly concentrated in a narrow set of sectors, particularly information technology and artificial intelligence. This investment boom has been especially pronounced in the United States, where IT investment as a share of output has reached a record high.
In addition, US equity market capitalisation has risen sharply relative to overall economic output, raising concerns that a market correction could have a more pronounced effect on consumer spending. The IMF also highlighted the growing exposure of foreign investors to US equities, which could amplify global spillover effects in the event of market volatility.
At the same time, the Fund acknowledged that the ongoing technology boom holds the potential for meaningful productivity gains. Should these gains materialise as expected, the IMF estimates that global output could increase by an additional 0.3 percent in 2026.
