The International Monetary Fund (IMF) has upgraded its global growth outlook for 2026, raising its estimate to 3.3% from 3.1% in its October forecast.
IMF Lifts 2026 Growth Forecast, But Warns AI and Debt Risks Loom
19 January 2026 - 15:30 CET
The US is expected to lead the G7 with growth of 2.4%, up from 2.0% previously, while the euro area and the UK are both seen expanding by 1.3%. Japan’s economy is forecast to grow by 0.7%, Canada's by 1.6%, and China's by 4.5%.
Risks abound
Despite some reasons for positivity, the risks to the outlook remain tilted to the downside, the fund warned.
Weaker growth expectations and uncertainty over the pace and profitability of AI adoption could curb investment, raising the risk of financial market corrections with broader economic spillovers. At the same time, unsustainable fiscal positions may push interest rates higher and tighten financial conditions, while trade tensions and ongoing geopolitical risks are expected to continue weighing on global activity.
On the upside, the IMF sees scope for further AI investment to boost adaptability and lift productivity, supporting stronger growth. A de-escalation of trade tensions would also provide a meaningful tailwind for global output.
"Against this backdrop of stabilizing trade tensions and supportive financial conditions, the global economy has continued to be remarkably resilient, adapting to the shifting landscape and with momentum varying across countries and sectors," it said.
High-tech spending
Global growth is expected to remain broadly stable, with high-tech investment continuing to act as a key driver even as its pace slows. However, the IMF cautions that expectations for AI-driven productivity gains may prove overly optimistic, raising the risk of a broader economic downturn.
A sharp pullback in real investment by the small number of tech giants dominating the AI sector, alongside weaker spending on AI adoption elsewhere, could trigger a stock market correction.
Such a reversal would likely leave excess capacity, force costly reallocations of capital and labour, and weigh on both investment and consumption. A reassessment of AI valuations would also hit regions and industries most exposed to high-tech activity, spreading globally through trade and tighter financial conditions.
The IMF estimates that even a moderate correction in AI-related equity valuations could shave around 0.4 percentage points off global growth.
Public debt
The IMF also highlights fiscal vulnerabilities as a growing threat to macro-financial stability.
Several major economies carry elevated public debt, while their currencies and equity markets play a central role in the global financial system. Risks to fiscal sustainability or sudden rises in interest rates could spill beyond sovereign balance sheets, tightening global financial conditions and amplifying market volatility.
Such sovereign stress could also transmit through financial channels to the private sector, raising borrowing costs and constraining investment.
