IMF: Global economy has overcome the tariff shock amid a technology-driven growth boom
IMF expects growth in the Middle East and Central Asia to accelerate from 3.7% in 2025 to 3.9% in 2026
اضافة اعلان
IMF: Global inflation expected to decline to 3.8% in 2026 and 3.4% in 2027
The International Monetary Fund (IMF) expects global economic growth to remain on a stable trajectory, registering 3.3% in the current year and 3.2% in 2027—levels similar to its estimate of 3.3% in 2025. The Fund noted that the world has managed to overcome the shock from tariffs amid a boom led by technology-driven growth.
According to the report, a copy of which was received by Al-Mamlaka, growth in the Middle East and Central Asia is expected to accelerate from 3.7% in 2025 to 3.9% in 2026 and 4% in 2027, supported by higher oil production, resilient domestic demand, and ongoing reforms.
The report describes global economic performance as “stable amid divergent forces,” explaining that this apparent stability results from a balance between negative and positive factors. Headwinds stemming from changes in trade policies are being offset by a strong boost from a surge in technology-related investment, including artificial intelligence—more pronounced in North America and Asia than in other regions—alongside fiscal and monetary support, broadly accommodative financial conditions, and the private sector’s ability to adapt.
Uneven global economic momentum
The report notes that economic momentum remains uneven across economies. While a “picture of rising investment” has emerged in information and technology sectors—reflected in the export performance of semiconductors and other equipment in Asian economies—the report emphasizes that even as signs of cooling begin to appear in high-frequency data, global trade has remained relatively strong. Rapid growth in technology-related exports has offset slowing momentum in exports of other product categories.
Regarding inflation, the IMF expects the global disinflation trend to continue in the coming period. Headline global inflation is projected to decline from 4.1% in 2025 to 3.8% in 2026 and then to 3.4% in 2027.
The report stresses that these projections are broadly unchanged compared with the October 2025 estimates, and that the path of inflation returning to target will be more gradual in the United States than in other major economies.
The report assumes that the suspension of higher tariffs will extend beyond their expiration dates and that higher tariffs will not come into effect. It expects the effective U.S. tariff rate used in the projections to reach 18.5%, compared with 18.7% in the October 2025 estimates, while the corresponding effective tariff rate for the rest of the world remains unchanged at 3.5%.
It also assumes that economic policy uncertainty will remain elevated throughout 2026.
Improvement in global trade in 2027
The report projects that global trade volume growth will slow from 4.1% in 2025 to 2.6% in 2026 before rising to 3.1% in 2027.
This is attributed to trade front-loading patterns and the adjustment of trade flows to new policies. Over the medium term, the report expects expansionary fiscal packages in economies with current account surpluses to help reduce global imbalances, countered by an opposing force in the form of a technology-driven investment boom that is expected to continue attracting capital flows to the United States, even as it moderates.
The report also warns that a significant escalation in geopolitical tensions—particularly in the Middle East or Ukraine, and possibly also in Asia and Latin America—could trigger broad negative supply shocks through disruptions to shipping routes, supply chains, air travel, and rising costs.
It further cautions that high fiscal deficits and elevated public debt could put pressure on long-term interest rates and overall financial conditions.
On the upside, the report identifies opportunities, including the possibility that rapid adoption of artificial intelligence—supported by ongoing investment in hard and soft infrastructure—could boost productivity and improve medium-term growth prospects. Global growth could rise by up to 0.3 percentage points in 2026 and by between 0.1 and 0.8 percentage points annually over the medium term, depending on the speed of adoption and improvements in global readiness, provided that complementary policies are in place to manage energy price impacts, expand the provision of critical intermediate inputs, and implement labor market programs to manage workforce transitions.
The report concludes that the policies required to maintain stability and sustainably enhance growth prospects over the medium term must clearly focus on restoring fiscal buffers, safeguarding price and financial stability, reducing uncertainty, and implementing structural reforms without delay.
It also emphasizes that central banks should adapt their policies to maintain price stability amid ongoing transitions. Countries where inflation is nearing target may consider gradual interest rate cuts to support activity if price stability risks remain contained, while greater caution is required in countries where inflation remains above target.
