WORLD - The International Monetary Fund (IMF) said the global economy remained resilient entering 2026 but faced growing pressures from rising public debt, geopolitical shocks, trade disruptions and rapid technological change, according to its 2026 Annual Report, Navigating a Precarious World.
The report covers the IMF’s work during fiscal year 2026 and examines four major forces shaping the global economy: increasing fiscal pressures, the expansion of artificial intelligence (AI), changes in global trade and supply chains, and the development of digital finance.
Public Debt Adds to Fiscal Pressures
The IMF said global public debt is rising again after briefly declining from pandemic-era highs. The report noted that debt was already on track to reach levels comparable to the period following World War II by 2028, before the outbreak of war in the Middle East added further pressure through higher energy prices, tighter financial conditions and weaker growth.
Interest payments have also increased significantly. According to the IMF, average interest payments have risen from about 2% to nearly 3% of GDP over three years, limiting the resources governments can allocate to areas including education, infrastructure and other public priorities. Low-income and energy-importing economies face particularly strong pressures.
The IMF said governments will need to prioritize spending, strengthen revenue collection and undertake structural reforms while maintaining fiscal space for investment and economic resilience.
AI Drives Investment and Raises Labor Risks
The report identified AI as a growing force in investment, productivity and labor markets. AI-related technology investment contributed an estimated 0.5 percentage point to US GDP growth in 2025, while private-sector AI investment could exceed $2 trillion globally in 2026, according to external estimates cited by the IMF.
The IMF said AI could increase productivity across industries but also create disruption for workers. Its research indicates that workers with AI-related skills tend to earn more, while some middle-skilled occupations face greater exposure to automation.
The report also warned that large AI investments could create financial risks if expected returns fail to materialize, particularly where investments are financed through debt. The IMF is monitoring potential effects on financial markets, employment, inequality and economic growth.
Trade Faces New Disruptions
Global trade also showed resilience despite higher trade barriers and geopolitical tensions. Trade volumes increased by nearly 5% in 2025, with technology-related goods continuing to expand. However, the IMF expects trade growth to slow in 2026 amid the effects of the war in the Middle East and continued supply-chain disruptions.
The report said the conflict and closure of the Strait of Hormuz caused a major disruption to global energy supplies, with consequences extending to commodities, food supplies and broader supply chains. Countries are increasingly seeking to diversify suppliers and strengthen trade resilience.
Digital Finance Expands
The IMF also highlighted the rapid development of stablecoins, digital payments, central bank digital currencies and tokenization. Stablecoin use in cross-border payments and remittances remains relatively small but has expanded, while tokenization is moving toward commercial applications.
The IMF said digital finance could lower payment costs and expand financial access, but regulators face risks involving financial stability, currency substitution and market volatility. The Fund is working with member countries on regulatory frameworks and interoperability between payment systems.
During fiscal year 2026, the IMF supported its 191 member countries through 138 Article IV consultations, $40 billion in lending to 18 countries and $400 million in capacity development, according to the report.
