ALBAWABA- As 2026 begins, the world economy faces heightened uncertainty, driven by regional conflicts, trade tensions, and risks from the artificial intelligence (AI) sector.
The IMF’s latest World Economic Outlook warns that global growth remains weak, with financial market fragility and labor pressures skewing risks to the downside.
In the United States, President Donald Trump’s “Liberation Day” tariffs in April 2025 sparked market disruption, while AI stocks, accounting for one-third of the S&P 500, drove over 90% of GDP growth.
Economists caution that a correction in the AI sector could erase trillions in wealth and reduce global consumption, affecting Europe and emerging markets.
Europe’s major economies, Germany, France, and Italy, are projected to grow below 1%, challenged by high debt and the ongoing Ukraine war impacts.
The UK, partially shielded by a May trade deal with the U.S., revised its forecast to 1.3%. Analysts note that fiscal tightening or continued conflict in Eastern Europe could trigger a recession, while peace could boost regional demand.
China remains fragile four years after its property market collapse, with real estate investment contracting and exports under pressure amid weak domestic consumption. The IMF projects GDP growth at 4.2% in 2026, reflecting structural vulnerabilities.
