The forecast appears in the IMF’s latest World Economic Outlook update for January, published on Monday. It represents a slight upward revision for 2026 compared with the October 2025 report, while the 2027 projection remained unchanged.
Despite uneven momentum across regions, the IMF said the global economy is sustaining growth because opposing forces are largely balancing each other out.
On the downside, the report highlighted rising trade tensions and shifting trade policies as key headwinds. However, these challenges are being offset by strong investment in technology—especially artificial intelligence (AI)—which is lifting growth prospects in North America and Asia more than elsewhere.
The IMF also credited broadly accommodative monetary conditions, supportive financial markets, and the private sector’s adaptability for underpinning economic stability.
Inflation Expected to Ease Gradually
The fund projected global inflation to ease from an estimated 4.1 per cent in 2025 to 3.8 per cent in 2026, before falling further to 3.4 per cent in 2027.
The IMF said inflation is expected to return to target levels more slowly in the United States than in other major economies, reflecting persistent price pressures in the world’s largest economy.
Growth Outlook by Region
Among advanced economies, growth is forecast at 1.8 per cent in 2026 and 1.7 per cent in 2027. Emerging markets and developing economies are expected to expand just above 4 per cent in both years.
In the Middle East and Central Asia, growth is projected to rise from 3.7 per cent in 2025 to 3.9 per cent in 2026, and to 4.0 per cent in 2027. The IMF attributed this to higher oil output, strong domestic demand, and ongoing reforms.
Sub-Saharan Africa is also expected to strengthen, with growth rising from 4.4 per cent in 2025 to 4.6 per cent in 2026 and 2027, supported by macroeconomic stabilisation and reform measures in major economies.
Nigeria’s economy is projected to grow by 4.4 per cent in 2026 before slowing to 4.1 per cent in 2027.
In Latin America and the Caribbean, growth is forecast to slow to 2.2 per cent in 2026, then rebound to 2.7 per cent in 2027 as countries move closer to potential growth from varying cyclical positions.
Emerging and developing Europe is expected to recover from a sharp slowdown in 2025. The IMF projected growth of 2.3 per cent in 2026 and 2.4 per cent in 2027.
Risks Still Lean Downward
The IMF warned that risks to the global outlook remain tilted to the downside. The report cited the possibility of technology investment expectations being revised downward and the potential escalation of geopolitical tensions.
However, the fund also highlighted potential upside, noting that AI-driven investment could further boost activity. If AI adoption leads to significant productivity gains and stronger business dynamism, the technology could drive sustainable growth over time.
A lasting easing of trade tensions could also support economic expansion, the IMF said.
Policy Advice
To support stability and long-term growth, the IMF urged policymakers to rebuild fiscal buffers, preserve price and financial stability, reduce uncertainty, and push forward structural reforms without delay.