The International Monetary Fund has raised its 2026 global growth forecast to 3.3 per cent, citing easing US tariffs and a surge in artificial intelligence investment, reported Reuters.

The IMF said growth will match 2025's 3.3 per cent pace, with 2027 projected at 3.2 per cent. Chief economist Pierre-Olivier Gourinchas noted businesses have adapted to higher US tariffs by rerouting supply chains, while new trade deals and China's export diversification have reduced disruptions.

The IMF now assumes an effective US tariff rate of 18.5 per cent, down from 25 per cent in April 2025. US growth is forecast at 2.4 per cent in 2026, supported by investment in AI infrastructure, though the 2027 forecast was trimmed to 2.0 per cent.

Spain's 2026 forecast was upgraded to 2.3 per cent, while Britain's remained at 1.3 per cent. The IMF warned the AI boom could fuel inflation or trigger a correction if productivity gains fail to materialise, but said adoption could lift global growth by up to 0.3 percentage points in 2026.

China's 2026 growth is projected at 4.5 per cent, reflecting reduced US tariffs and export shifts to Southeast Asia and Europe. The euro zone forecast rose to 1.3 per cent, driven by German spending and stronger performances in Spain and Ireland. Japan saw a slight upgrade, while Brazil's forecast was cut to 1.6 per cent due to tighter monetary policy.

Global inflation is expected to ease from 4.1 per cent in 2025 to 3.8 per cent in 2026 and 3.4 per cent in 2027, leaving scope for more accommodative monetary policies to support growth.