The International Monetary Fund has raised its 2026 growth projection for China to 4.5 percent, up 0.3 percentage points from its October forecast, due to eased trade tensions and sustained domestic policy support. China's 2025 growth forecast was also revised upward by 0.2 percentage points to 5 percent. The changes reflect stimulus measures and additional policy bank lending for investment.
The International Monetary Fund (IMF) raised its 2026 growth projection for China to 4.5 percent in its World Economic Outlook update released on Monday, an increase of 0.3 percentage points from the October forecast. This upgrade stems primarily from lower effective U.S. tariff rates on Chinese goods, following a yearlong trade truce agreed by the two sides in November, and the ongoing implementation of stimulus measures over two years.
The IMF expects China's growth to slow to 4 percent in 2027 as "structural headwinds assert themselves." For 2025, the growth forecast was revised up by 0.2 percentage points to 5 percent, reflecting stimulus measures and additional policy bank lending for investment.
On the same day, China's National Bureau of Statistics announced that the country's gross domestic product reached a record $20.01 trillion last year, growing 5 percent. Kang Yi, head of the bureau, said China has introduced more proactive and effective macro policies amid sudden shifts in the external environment and growing domestic challenges, helping to cushion external shocks and stabilize the development foundation despite headwinds. He added that China has maintained one of the fastest growth rates among major economies and remains one of the world's most stable and reliable engines of global expansion, with its contribution to global growth expected to be about 30 percent.
Globally, the IMF upgraded this year's growth projection to 3.3 percent, slightly higher than its October forecast, with much of the improvement driven by the U.S. and China. U.S. growth is estimated at 2.4 percent, 0.3 percentage points above the prior projection, citing fiscal policy support, lower interest rates, and diminishing effects of higher trade barriers. IMF chief economist Pierre-Olivier Gourinchas and colleague Tobias Adrian wrote in a blog post accompanying the update that the world has "largely shaken off the immediate impact of the tariff shock." They attributed the resilience to easing trade tensions, bigger-than-expected fiscal support, supportive financial conditions, the private sector's agility in navigating disrupted trade flows, and stronger policy frameworks in emerging markets.
They highlighted a continued surge in information technology investment, especially in artificial intelligence, as another key driver. U.S. IT investment as a share of economic output has reached the highest level since 2001, boosting business spending even as manufacturing stays subdued. While concentrated in the U.S., the boom spills over borders via demand for components and equipment, benefiting Asia's technology exports. Looking ahead, AI could lift global activity by about 0.3 percent relative to baseline if productivity gains materialize, but a moderate valuation correction with tighter financial conditions might cut growth by 0.4 percent, with larger losses if real investment in technology sectors declines more sharply.
