In brief
In its latest economic outlook, the IMF has identified trade tensions, particularly in light of tariffs proposed by Donald Trump, and potential reversals in the AI boom as key threats to global growth. The organization projects a modest increase in global growth rates for this year, accompanied by calls for the protection of central bank independence to ensure economic stability.
Trade tensions and a reversal in the artificial intelligence (AI) boom are among the main risks to global economic growth, the International Monetary Fund (IMF) has warned.
Its comments came in its latest world economic outlook, where it described the global economy as steady, with growth expected to remain resilient this year.
The IMF's forecast was produced ahead of Donald Trump's threat at the weekend to impose tariffs on eight European countries opposed to his proposed takeover of Greenland.
The fund also said the independence of central banks was paramount for global economic stability and growth.
The economic watchdog said global growth was projected to reach 3.3% this year - an increase from its previous forecast of 3.1% - before slowing slightly to 3.2% in 2027.
Speaking to the BBC, IMF chief economist Pierre Olivier Gourinchas said: We have a picture of a global economy that is growing at - it's not outsized growth rates but it's quite resilient, quite robust.
In a sense the global economy has been shaking off the trade disruptions of 2025, and it's coming out ahead of what we were expecting.
He said while the effects of Trump's tariffs have been definitely to slow down global activity, there have been other factors that have been more than offsetting.
The IMF's report indicates the global economy has been bolstered by tailwinds from surging investment related to technology, including artificial intelligence (AI).
However, it warned that risks to the global outlook remain tilted to the downside, cautioning that overly optimistic expectations about AI growth could trigger abrupt market corrections.
Even a relatively mild market correction could have significant repercussions, Gourinchas noted, especially given the substantial share price gains contributing to individual wealth.
Another risk highlighted by the IMF is the possibility of trade tensions flaring up, which could prolong uncertainty and weigh heavily on economic activity.
Domestic political tensions or geopolitical tensions could erupt, introducing new layers of uncertainty and disrupting the global economy through their impact on financial markets, supply chains, and commodity prices, the report states.
The IMF estimates the UK grew by 1.4% in 2025, with a forecast for the current year at 1.3%, predicting it will be the third fastest growing economy in the G7.
Chancellor Rachel Reeves commented on the report, noting that the IMF has upgraded the UK's growth forecasts multiple times, highlighting the country's potential for being the fastest growing economy in the European G7 this year and next.
However, shadow chancellor Sir Mel Stride remarked that a 0.1% increase isn't a significant victory, indicating political tension surrounding economic performance.
As for inflation, the IMF predicts a decline from 4.1% in 2025 to 3.4% by 2027, with UK inflation expected to return to target levels by year's end, as labor market weaknesses keep wage growth low.
Furthermore, the IMF emphasized the necessity of central bank independence for macroeconomic stability, asserting that maintaining this independence is critical to avoid fiscal dominance and ensure stable inflation expectations.
