An “investment surge” in artificial intelligence has helped the US avoid a sharp slowdown but risks stoking inflation, the IMF’s chief economist has warned, as the fund upgraded its outlook for the world’s largest economy.

The IMF on Tuesday delivered more optimistic forecasts for both global growth and the US economy despite bleak predictions earlier this year that Donald Trump’s trade war risked plunging the world into a “significant slowdown”. 

As finance officials gather in Washington for the IMF’s annual meetings, the fund lifted its 2025 global growth projection by 0.2 percentage points compared to its last estimate in July, predicting world GDP will rise by 3.2 per cent this year, only slightly shy of 2024’s 3.3 per cent figure. Global growth is forecast to be 3.1 per cent in 2026.