Transcript: Press Conference on the Release of the January 2026 World Economic Outlook Update

IMF News, January 21, 2026

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Published: January 21, 2026

Global outlook and headline projections

Global growth will hold steady at 3.3 percent this year.
This is an upward revision of 0.2 percentage points compared to October estimates.
Global growth for 2025 and 2026 is expected to be stronger than projected in October 2024 (before the tariff disruption).
Global inflation trajectory:
- 4.1 percent in 2025
- 3.8 percent this year
- 3.4 percent in 2027
Assumption for baseline projections: current tariff levels remain unchanged (effective tariff rate estimated at around 18.5 percent for the U.S. against the rest of the world).

Main drivers of resilience

Private sector agility and functioning supply chains.
Supportive financial conditions amid a tech AI investment boom.
Stronger stimulus in some countries, especially China and Germany.

Key downside and stability risks

Concentration of growth in information technology and artificial intelligence (AI).
- U.S. IT investment as a share of output has surged to an all-time high.
- Potential overvaluation of the U.S. equity market remains modest so far compared to the 1995–2000 dot-com episode.
- A moderate correction in AI stock valuations coupled with tighter financial conditions could reduce global output by 0.4 percent in 2026.
- If AI productivity gains materialize, global output could increase by 0.3 percent in 2026.
- Broader vulnerabilities: many critical AI firms are not listed; increased debt financing; higher U.S. equity market capitalization relative to output; increased foreign holdings of U.S. equities.
Trade and geopolitical tensions
- Escalation or tit-for-tat tariff responses could materially reduce growth.
- IMF October simulation: an increase in tariffs and supply-chain disruptions could bring global output down by about 0.3 percent in 2026.
Cooling labor markets
- Unemployment rates rising above natural rates in many countries.
- U.S. labor share at an all-time low; concerns about worker displacement from AI.
Financial fragilities
- Leverage buildup and weaknesses in non-bank financial institutions require vigilance.
Fiscal risks and erosion of discipline
- Pandemic increased public debt by an additional 2 to 8 percent of GDP in advanced economies.
- Weaker fiscal discipline raises vulnerability to future shocks.
Central Bank independence and credibility
- Weakened credibility, including of the U.S. Federal Reserve, could reduce global output by 0.3 percent in 2026 (October scenario).
- Loss of independence risks higher inflation expectations, currency volatility, and lower growth.

Oil market considerations

Baseline assumes moderate decline in oil prices through 2026 due to ample supply.
Iran exports about 1.6 million barrels per day, roughly 1.5 percent of world consumption; disruptions could increase prices.
Venezuela’s capacity to increase exports is limited given infrastructure constraints.
Broader regional disruptions (e.g., through the Straits of Hormuz) present larger upside risks to oil prices.

Policy guidance and priorities (IMF emphasis)

Vigilance: monitor financial fragilities, leverage, and non-bank financial sector risks.
Preparation: rebuild fiscal buffers where needed; restore credible fiscal paths.
Agility: central banks must be ready to tighten if demand pressures build or ease rapidly if labor weaknesses or market corrections occur.
Preserve Central Bank independence to maintain credibility and price stability.
Multilateral cooperation and stable, predictable trade rules to minimize disruptions and support medium-term growth.

Regional and country highlights

United States
- 2025 growth expected at 2.4 percent (upward revision of 0.3 percentage point).
- Growth expected to accelerate from 2.1 percent in 2025 to 2.4 percent in 2026.
- Tariffs have been absorbed largely by U.S. firms so far; partial pass-through to consumer prices expected in 2026.
- AI investment boom is a major positive driver; increased debt financing for investment is a watch item.
China
- 2025 GDP reported at 5 percent (aligns with IMF revised estimate).
- 2026 growth expected at 4.5 percent (upward revision of 0.3 percentage point).
- China remains imbalanced: strong external reliance, weak domestic demand, near-deflationary price pressures (inflation effectively zero in 2025; expected 0.8 percent in 2026).
- Policy recommendation: resolve property sector problems and rebalance toward domestic demand.
Spain
- Upgraded forecast to 2.3 percent for this year (upward revision of 0.3 percentage point).
- Drivers: robust private consumption and investment; relatively high savings rate supports consumption.
India
- 2025 growth estimated at 7.3 percent (upgrade of 0.3 percentage point).
- 2026 growth expected at 6.4 percent (upgrade of 0.2 percentage point).
- Drivers: strong private consumption, increased real incomes due to lower inflation, strong rural activity and good monsoon-related harvests; public investment push recommended to sustain momentum.
Sub-Saharan Africa
- 2025 growth 4.4 percent (0.2 percentage point higher than October projection).
- 2026 and 2027 growth expected at 4.6 percent (cumulative 0.3 percentage point higher than October).
- Drivers: buoyant commodity prices (gold, copper, coffee), macro stabilization in economies like Ethiopia and Nigeria, structural reforms in South Africa, and improved global financial conditions.
- Risks: potential cuts in international development assistance; sensitivity to global financial condition reversals.
Egypt
- Growth: 4.4 percent in 2025; 4.7 percent this year; 5.4 percent in 2027 (all upward revisions).
- Drivers: strength in non-oil manufacturing, tourism, telecoms; stabilization and expected pickup in Suez Canal activity; supply-side structural reforms.
Saudi Arabia
- Upward revisions to output for 2025 and forward.
- Drivers: higher-than-expected refined oil product production, robust domestic demand linked to Vision 2030 reforms, and upward historical revisions to data.
Mexico
- 2025 growth downgraded to 2.6 percent.
- Drivers of 2025 weakness: tight monetary and fiscal policies (used to bring inflation down) and trade-tension headwinds; forecast expects recovery as fiscal policy becomes broadly neutral and monetary easing occurs gradually.
Brazil
- Growth expected to moderate from 2.5 percent in 2025 to 1.6 percent this year (downgrade).
- Drivers: tight monetary policy to curb inflation and weaker performance in interest-sensitive sectors in late 2025; medium-term pickup expected with pro-growth agenda, income tax reform, and future monetary easing.

IMF scenarios and monitoring

AI/financial correction scenario:
- A moderate correction in AI stock valuations and tighter financial conditions could reduce global output by 0.4 percent in 2026.
- Upside scenario: realized AI-driven productivity gains could raise global output by 0.3 percent in 2026.
- Monitoring priorities: market valuations, profitability, increasing leverage, opacity of financing structures, non-bank exposures, labor-market impacts.
Trade escalation scenario:
- IMF October simulation: increased tariffs and supply-chain disruptions could reduce global output by about 0.3 percent in 2026.
Central bank credibility scenario:
- Weakened credibility could reduce global output by 0.3 percent in 2026 (October analysis).

Transcript of IMF press conference, January 21, 2026 — IMF Communications Department; remarks by Pierre-Olivier Gourinchas, Petya Koeva Brooks, Deniz Igan, and moderator Jose Luis De Haro.