IMF Upgrades China’s 2026 Growth Forecast on Trade Truce and Policies

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The International Monetary Fund has updated its forecast for China’s economic growth, attributing the increase to easing trade tensions with the United States and ongoing domestic stimulus measures. The organization now anticipates China’s GDP will grow by approximately 4.5% in 2026, up from the previous estimate of 4.2% in October. For 2027, the forecast stands at a 4% expansion, considering existing structural challenges.

This upward revision stems from the reduced effective US tariffs on Chinese imports, a result of a year-long trade truce agreed upon in November, alongside anticipated stimulus initiatives over the next two years. The IMF explained that longstanding supportive measures continue to bolster the economy and are expected to persist into 2026. According to the IMF’s chief economist, the impact of the recent trade disruptions is expected to diminish, providing further support for economic activity moving forward.

Additionally, the IMF raised China’s growth estimate for 2025 from 4.8% to 5%, aligning with the National Bureau of Statistics’ subsequent announcement, which confirmed China’s GDP reached a record 140.2 trillion yuan (approximately $20.1 trillion) last year.

Global economic growth remains resilient, with a forecast of 3.3% this year and 3.2% in 2027. The IMF noted that these figures represent a slight upward revision for 2026 compared to previous predictions, with no change expected for 2027.

The organization also revised the US GDP growth outlook for this year to 2.4%, up from 2.1%. This improvement is attributed to fiscal policy easing and lower policy interest rates, even as the effects of rising trade barriers gradually diminish. While technological momentum is expected to slow somewhat, it will still provide some offset amid lower immigration and moderating consumer spending.

Meanwhile, the World Bank’s latest Global Economic Prospects report projects global growth at just 2.6% this year. Their estimate for China’s growth in 2026 is 4.4%, closely aligned with the IMF’s assessment, while their forecast for the US growth rate stands at 2.2%, slightly below the IMF’s prediction.