The International Monetary Fund (IMF) has released its latest World Economic Outlook, indicating persistent global growth but increased risks. The IMF projects that global GDP growth will decrease from 3.5% in 2025 to 3.1% in 2026, averaging 3.2% from 2026 to 2031. In the U.S., GDP growth is expected to be lower than the global average, at 2.3% in 2026 and 2027, and 2.0% between 2026 and 2031. China is forecasted to maintain a stronger growth rate, with a real GDP increase of nearly 4.5% in 2026 and an average of 3.8% for the following five years.
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Many G20 economies are projected to lag, with several European nations, including Germany, France, and Italy, experiencing growth below 1.0% annually through 2031. The United Kingdom's GDP growth is anticipated to average 1.4%, while Belgium is projected at 1.2%. Japan's growth is expected to slow significantly from 1.2% in 2025 down to 0.8% in 2026, averaging 0.6% through 2031.
Global headline inflation is estimated to rise to 4.7% in 2026, up from 4.1% in 2025, before moderating to 4.1% in 2027. This adjustment follows a revision of inflation projections by 0.7 percentage points compared to forecasts from April, primarily due to higher energy prices stemming from Middle East disruptions and increased food prices influenced by energy and transportation costs.
Public debt levels are expected to rise significantly over the next five years, with several major economies confronting unprecedented deficits. In advanced economies, fiscal policies are projected to remain neutral in 2026 but tighten toward the end of the five-year window. The IMF estimates that U.S. net debt will increase by over 18 percentage points, reaching approximately 117% of GDP, while Germany's debt-to-GDP ratio is expected to grow by 13 percentage points, driven by rising infrastructure and defense expenditures.
In contrast, other G20 countries like Japan will see their debt-to-GDP ratio decrease from 127% to 116% due to favorable borrowing conditions. However, borrowing costs are climbing in most advanced markets; the U.S. has witnessed rates on 10-year government bonds rise nearly a percentage point since February. With interest rates increasing, interest costs are projected to account for about 2.3% of global GDP by 2026.
IMF Managing Director Kristalina Georgieva emphasized the need for more than just growth to address debt issues, stating that growth must be coupled with necessary adjustments. The IMF advises improving tax systems, restructuring public spending for enhanced growth, implementing fiscal consolidations in high-debt countries, and providing targeted responses to energy shocks, particularly for vulnerable nations.