The International Monetary Fund (IMF) says global trade growth is expected to slow in 2026 and stabilise in 2027, as tariffs and changes to production chains offset continued strength in technology-related trade.
In its report, Resilience Under Strain, Urgent Choices, the IMF said the global economy had proved more resilient than expected during the first half of 2026, despite the continuing war in the Middle East and persistent trade tensions.
Global growth is forecast at 3.1 percent in 2026 and 3.4 percent in 2027. The 2026 projection is unchanged from the April 2026 World Economic Outlook (WEO), while the 2027 estimate has been revised moderately upwards.
Global headline inflation is expected to rise to 4.7 percent in 2026 before falling to 4.1 percent in 2027. The figures represent a cumulative upward revision of 0.7 percentage point, with the temporary increase driven mainly by higher energy and food prices.
The IMF said strong investment in artificial intelligence (AI) had supported demand and helped power a technology cycle. However, the combination of geopolitical tensions and technological change has created an increasingly divided global economy.
Some countries are benefiting from favourable terms of trade or from exports and investment linked to technology. Energy exporters outside the immediate conflict zone have also gained from improved trading conditions.
Other economies, particularly those importing energy and with limited links to the technology supply chain, face higher import costs, pressure on exchange rates, weaker real incomes and less room for fiscal support. Many low-income and vulnerable countries fall into this category, raising concerns that recent shocks could widen income differences within and between countries.
The IMF said economies had so far absorbed the effects of the war through flexible supply responses, the rerouting of shipments, reductions in inventories, fiscal support and lower energy intensity than in previous decades.
“Private firms have continued to adjust to repeated shocks, including geopolitical risk and shifts in trade policy, while financial markets have maintained a broadly benign view of the challenges, also buoyed by exuberance in the technology segment,” the report said.
But it warned that the available safeguards were becoming increasingly limited. Inventories have been reduced, commodity markets remain exposed, and greater fragmentation could damage efficiency. Prolonged uncertainty may weaken confidence, while energy constraints could undermine the AI-led growth impulse.
The IMF also warned that financing conditions could change suddenly, including because of concerns about fiscal sustainability.
The medium-term outlook remains weak by historical standards and uneven between countries, partly because of differences in AI readiness and the strength of national energy systems. Global imbalances are expected to narrow only modestly, with large fiscal deficits, limited domestic rebalancing, technology-driven capital flows and differing patterns of demand continuing to support external gaps.
The main risks remain to the downside. A prolonged stalemate or further escalation in the Middle East could keep energy and food prices high and volatile, reignite inflationary pressure and weaken economic growth. Damage to energy infrastructure, cyberattacks and extreme weather could intensify those effects.
The IMF added that supply-driven commodity price increases tend to have larger and longer-lasting economic consequences than rises caused by geopolitical risks. A reassessment of AI’s profitability and productivity potential could reduce investment sharply, trigger falls in equity markets and tighten financial conditions, affecting economies involved in technology supply chains and those with significant technology-stock holdings.
