The IMF improves its economic growth forecasts despite tariffs

BarcelonaThe International Monetary Fund (IMF) on Monday raised its economic growth forecasts for 2026 for the global economy, the eurozone, the United States, China, and Spain. The organization noted that "headwinds [to growth] stemming from changing trade policies are offset by tailwinds linked to increased investment in technology, including artificial intelligence (AI), more so in North America and Asia than in other regions," according to its report.

These tailwinds are complemented by fiscal and monetary support, favorable financial conditions, and the "adaptability of the private sector," according to the fund's analysis, which forecasts that the effect of tariffs on growth will diminish in 2026 and 2027.

has raised its growth expectations for both this year and next, with a projected expansion rate of 2.3% in 2026, three-tenths of a percentage point higher than anticipated last October, and 1.9% in 2027, two-tenths of a percentage point higher than the previous report from the organization.

Although the IMF's growth projections for Spain represent a substantial slowdown compared to the 2.9% GDP increase estimated for 2025, Spain will still be the best-performing major European economy this year, nearly doubling the expansion rate of the Eurozone (1.2%, 2.4% projected for the United States).

With the latest IMF forecast, the projection for Spain in 2026 even surpasses the Spanish government's own expectations, which in November maintained its 2.2% projection for 2026. However, the updated forecast of 1.9%, as projected by the Spanish government, would represent the slowest pace of expansion for the Spanish economy since 2014, with the exception of the 2020 contraction due to the COVID-19 pandemic.

In any case, the updated IMF projections once again highlight the performance of the Spanish economy among the Large developed economies, since only the US will grow more than Spain this year and next, with forecasts of 2.4% in 2026 and 2% in 2027. In the case of the eurozone, the IMF raises its forecast for this year by one-tenth of a percentage point to 1.3%, while maintaining the 2027 forecast unchanged at 1.4%, after improving its projection by two-tenths of a percentage point to 1.1%, compared to 1.5% for 2027. For France, the IMF improves its 2026 forecast to 1%, one-tenth of a percentage point higher, and reiterates its estimate of 1.2% for 2027, while for Italy it predicts GDP growth of 0.7% for both years but an upward revision of one-tenth of a percentage point for 2027.

Unresolved difficulties

"Slightly faster growth in 2027 reflects projected increases in government spending, particularly in Germany, along with continued strong performance in Ireland and Spain," the IMF states, although it warns that the moderate growth rate anticipated for the eurozone reflects unresolved structural difficulties. In this regard, it expects the impact of increased defense spending to materialize only in subsequent years, given the commitments to gradually reach the levels projected for 2035. Compared to other regions, the eurozone benefits less from the recent boost in technology investment, while the lingering effects of the Ukraine crisis will continue to weigh on industry.

On a global scale, the IMF's new forecasts point to world growth of 3.3% in 2026, in line with last year's figure and two-tenths of a percentage point higher than previously expected, while maintaining the 3.2% estimate for 2027 unchanged. Growth is projected at 1.8%, compared to the previously estimated 1.6%, while next year's growth is expected to be 1.7%, unchanged from October. For emerging economies, the expected growth improves by two-tenths of a percentage point to 4.2% in 2026, but worsens by one-tenth of a percentage point for 2027, to 4.1%.

Upward revision for China and India

For China, the forecast is revised upwards by three-tenths of a percentage point this year, to 4.5%, although the IMF cuts next year's forecast by two-tenths of a percentage point, to 4%. Meanwhile, India's forecast for 2026 is improved by two-tenths of a percentage point, to 6.4%, and the 2027 forecast remains confirmed, also at 6.4%.

In its analysis, the institution headed by Kristalina Georgieva points out that this stable outlook reflects "the balance of power": trade policies are offset by favorable factors stemming from increased investment in technology, including artificial intelligence (AI), as well as private fiscal and monetary support measures.

AIREF improves forecasts, but calls for budgets

The Independent Authority for Fiscal Responsibility (AIReF) has also raised its forecast for Spanish economic growth this year to 2.4%, three-tenths of a percentage point higher than its December prediction, anticipating a "more vigorous" end to 2025. The agency indicated that this dynamic "will have positive spillover effects" on GDP growth "in volume for 2026." It also attributes this to the "greater dynamism" of household consumption, "compensating for the decline in the contribution of the external sector." The agency estimates that growth will reach 2.9% in 2025, one-tenth of a percentage point lower than previously forecast. Meanwhile, the independent authority maintains its projection of ending the year with a public administration deficit of 2.5%. AIReF President Cristina Herrero stated this Monday that uncertainty "is no excuse" for not making forecasts or presenting a draft national budget. "Doubts about the impact of the United States' tariff decisions (...) cannot lead to such a cautious stance as the one argued by the Ministry of Finance in response to our recommendations, by not presenting a draft budget and leaving all public administrations and stakeholders without clear guidelines (...) in these uncertain times," he stated.