IMF: The global economy shows flexibility in the face of challenges and tensions

In its annual report issued on Tuesday, International Monetary Fund that The global economy enters the years 2025 and 2026 at a stable but limited pace of growth, in light of the escalation of protectionist policies and the risks of a slowdown in Europe and China, in exchange for continued momentum in the American economy supported by artificial intelligence.
The report confirms that the stability of the global trading system will remain the decisive factor in maintaining this fragile growth, warning that any new trade escalation may return the world to… A more turbulent path.

Stabilizing US customs duties

The Fund indicated that stabilizing US customs duties after increasing them last year contributed to providing a clearer view of the markets, although the state of uncertainty still casts a shadow over expectations.
The Fund’s chief economist, Pierre-Olivier Gorinchas, explained that the full impact of these duties takes time to appear, adding that: "The trade shock was lower than expected" Thanks to bilateral agreements and exemptions that spared some economic partners direct confrontation with Washington.
He also pointed out that the redirection of trade flows is one of the most prominent results of this policy, as exchanges between China and Asian and European countries increased at the expense of its dealings with the United States.

Growth supported by artificial intelligence

The international organization expects that the American economy will end in 2025 With a growth rate exceeding 2%, with a similar performance in 2026 (2.1%).
The Fund believes that huge investments in artificial intelligence contribute to supporting American economic activity, but at the same time they carry inflationary risks that may push the Federal Reserve to tighten monetary policy again.
The Fund also warned of the possibility of a sharp correction in the financial markets if the expected revenues from it are not achieved. Artificial intelligence investments, which may have a negative impact on consumption and investment.

Variation within the Eurozone

Despite the better performance than previous expectations, the Eurozone will witness a slowdown in 2026, as its growth is expected to reach only 1.1%.
The detailed analysis was as follows:
– Germany and France: modest growth at 0.9%.
– Italy: 0.8%.
– Spain: The most prominent exception, with growth of 2.9% in 2025, but it will decline to 2% in 2026.

The real estate bubble weakens growth in China

The Fund expected that China’s growth would remain below 5% during the next two years (4.8% in 2025 and 4.2% in 2026), noting The Chinese economy is still suffering from the repercussions of the real estate sector bubble and an unsustainable export-dependent growth model.
Gorinchas stressed that China "Still on the verge of contraction" In light of weak domestic demand and the absence of strong growth incentives.

Mexico’s performance is better than expected

Despite previous expectations that it would enter a recession, Mexico’s economy showed an ability to withstand the impact of US tariffs, with growth expected at 1% this year and 1.5% in 2026, an indication of improved performance compared to previous estimates.

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