The International Monetary Fund has raised its assessment of global economic growth for 2026 to around 3%, although the outlook continues to face significant risks from energy supply disruptions, historically high public debt, stalled progress on inflation and uncertainty surrounding the economic and financial impact of artificial intelligence. IMF Managing Director Kristalina Georgieva shared the assessment while addressing a meeting of G20 finance ministers and central bank governors in Asheville, North Carolina. She said policymakers broadly agreed that efforts were needed to increase potential growth as economies continued to face repeated shocks and heightened uncertainty across the global environment.
Georgieva stressed that structural reforms, combined with sound fiscal and monetary policies, would be necessary to establish the conditions for stronger and more balanced global growth. She also highlighted the importance of international cooperation in helping countries address debt challenges, manage cross-border spillovers and respond to widening global economic imbalances. According to the IMF chief, the global economy has so far absorbed the effects of the energy supply shock better than initially anticipated, with strategic oil and gas reserves, alternative energy sources and demand-management measures helping economies manage the disruption.
Investment linked to artificial intelligence has also provided support to economic activity, particularly in the United States. Georgieva noted that spending on power infrastructure required to meet rising energy demand associated with AI was emerging as an additional source of economic activity. Economies integrated into the global AI supply chain, including South Korea, have also benefited from the increase in investment and demand associated with the technology. However, she cautioned that global averages can conceal considerable differences between individual economies, meaning that the overall 3% growth projection should not be interpreted as a uniform improvement across countries.
The IMF managing director warned that the energy shock remains unfinished, with the Strait of Hormuz still largely closed and strategic energy reserves eventually requiring replenishment. At the same time, the rapid expansion of artificial intelligence is contributing to higher global energy demand as the Northern Hemisphere approaches winter. These developments could create additional pressure for economies already dealing with energy-related uncertainties. Georgieva therefore maintained that risks to the global economic outlook remain elevated despite the stronger-than-expected performance seen in some areas of the world economy.
Public debt was identified as another major challenge. Georgieva said global public debt has reached almost 100% of worldwide GDP, exceeding levels recorded following World War II and continuing to increase. She compared the trajectory of global debt to a staircase, explaining that debt tends to rise sharply during major economic shocks but often experiences little or no decline after those shocks pass. The elevated debt burden is creating additional pressure on governments at a time when many countries also need resources for infrastructure, social services and measures to support economic growth.
On inflation, Georgieva said the process of disinflation had stalled across a number of economies. Increasing fiscal pressures are also pushing core government bond yields higher, while raising concerns among investors about the interaction between fiscal and monetary policies. She said central banks should remain focused on their price stability mandates, while governments should establish credible medium-term plans for fiscal consolidation. Structural reforms should also focus on reducing bureaucracy and removing domestic barriers that limit economic activity and productivity. Stronger potential growth, she said, could help address fiscal pressures, while resolving fiscal problems could in turn improve growth prospects.
The IMF chief also discussed the financial position of emerging and low-income economies. She said sovereign debt conditions in these countries had gradually improved in recent years as a result of domestic reforms and international cooperation, although progress remained uneven. Rising interest rates in global markets have created renewed pressure, with higher yields in advanced economies increasing borrowing costs across countries. In some cases, these higher costs have more than offset the lower risk premiums achieved by emerging economies through improved economic policies.
High refinancing requirements and increasing debt-servicing costs are limiting the ability of many developing countries, particularly low-income economies, to allocate resources toward infrastructure, healthcare and education. Georgieva warned that these constraints could weaken long-term growth prospects while also creating additional challenges for debt sustainability. Developing economies are also facing a significant decline in net external financing, including lower official development assistance and reduced inflows from creditors outside the Paris Club.
To address developing-country debt challenges, Georgieva outlined three key priorities. Countries facing unsustainable debt require decisive restructuring, supported by improvements in international debt-resolution mechanisms, including progress through the G20 Common Framework and the Global Sovereign Debt Roundtable’s updated Restructuring Playbook. For countries with sustainable debt that are pursuing growth-oriented reforms, she called for faster implementation of the IMF-World Bank Three-Pillar Approach. She noted that the approach has worked well in countries including Ecuador and Pakistan. The third priority involves greater debt transparency, stronger debt-management capabilities and improved relationships between borrowers and investors, with sound economic fundamentals remaining essential.
Georgieva also warned that global economic imbalances widened substantially during 2025. According to the IMF’s latest External Sector Report, excess imbalances not explained by underlying economic fundamentals increased by 0.7 percentage points of global GDP, representing the largest annual increase in a decade. The two largest economies in the world made major contributions to these imbalances. She called for policy action from both surplus and deficit economies, with surplus countries encouraged to pursue market-oriented reforms that can strengthen domestic consumption, while deficit economies should undertake fiscal consolidation to increase national savings.
The IMF’s latest assessment therefore presents a global economy that is performing better than some earlier expectations while still facing considerable structural and financial pressures. The projected 3% growth for 2026 reflects resilience across several major economies, supported in part by investment associated with artificial intelligence and measures taken to manage energy disruptions. At the same time, elevated public debt, persistent inflation pressures, rising borrowing costs, reduced external financing and widening global imbalances remain important concerns. Georgieva stressed that policymakers now need to move beyond identifying these challenges and focus on coordinated policy measures capable of strengthening economic resilience and supporting sustainable global growth.
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