‘It was Internet then, it’s AI now’: IMF upgrades US growth forecasts but sees ‘echoes’ of late 1990s dot-com boom

US economy The International Monetary Fund expects the economy to grow by 2% in 2025, in its influential semi-annual forecast, “World Economic Outlook.” This is slightly higher than the IMF’s forecast of 1.9%. Last updated in July and 1.8% in April. The International Monetary Fund said the United States is expected to grow 2.1% next year, just 10% faster than its previous forecast.

However, its current forecast remains lower than last year, a sign that the international lending agency expects tariffs to weaken the US economy, in part by creating more uncertainty for businesses. Last October, the International Monetary Fund expected the United States to grow by 2.2% this year.

All forecasts also represent a slowdown from 2024, when the US economy expanded at a faster rate of 2.8%.

Meanwhile, the global economy will grow by 3.2% this year, up from a 3% estimate in July, according to the International Monetary Fund, and 3.1% in 2026, the same as the previous estimate.

The IMF said that while the US and global economies have performed better than expected, it is too early to say it is all in the clear, as Trump continues to threaten tariffs and it may take some time for changes to occur in international trade patterns.

On Friday, for example, Trump threatened to do so Slap 100% duties on all imports from China, causing a sharp decline in the stock market.

The chief economist of the International Monetary Fund, Pierre-Olivier Gorinchas, said in a press conference that import taxes and Constant threats to impose more fees It has created ongoing uncertainty for many businesses and is impacting the global economy.

He added: “The tariff shock is there, and it further darkens the already weak growth prospects.”

Gorinchas also said that a wave of investment in artificial intelligence, in the form of massive data centers and large-scale computing capacity, has helped offset the trade slowdown and boost the U.S. economy. However, he said that if a financial market bubble forms and then bursts, it could lead to a sharp slowdown in business investment and consumer spending.

“There are echoes in the current boom in technology investing of the dot-com boom of the late 1990s,” he said. “It was the Internet then, it’s artificial intelligence now.”

Shares of two companies active in the artificial intelligence sector, AMD and oraclewhich was announced Expanded partnership on Tuesdayhas seen its shares rise 80% this year.

Gourinchas said gains in stock values ​​linked to artificial intelligence have increased Americans’ wealth and fueled consumer spending, just as companies are increasing their investments in advanced computer chips and building data centers. He said hotter spending and investment could prompt central banks to raise interest rates over time.

Gorincha also offered several reasons why the U.S. and global economies should remain resilient after widespread tariffs were imposed earlier this year.

“First of all, the tariff shock itself is smaller than initially expected, with many trade deals and exemptions in place,” he said. “Most countries also refrained from retaliating, keeping the trading system open. The private sector also proved resilient, loading imports early and redirecting supply chains.”

By front-loading imports, many U.S. companies were able to stockpile goods before the tariffs took effect, enabling them to avoid or delay price increases.

However, many of these factors reflect only “temporary relief, not underlying strength in economic fundamentals,” the IMF report said.

The IMF also said that U.S. import price data shows that importers and retailers have so far been paying most of the tariffs, not foreign companies, as many Trump administration officials had expected. Over time, these companies will likely pass on more of the price increases to consumers, the report said.

The IMF forecast said there were signs that some of the downsides of high tariffs were beginning to emerge. Core inflation, which excludes volatile food and energy categories, rose to 2.9%, according to the Federal Reserve’s preferred measure, up from 2.7% a year ago. Hiring has almost stopped, which may partly reflect a more cautious approach by many companies in the wake of uncertainty caused by higher tariffs.

The IMF forecast is somewhat more optimistic than those of many private sector economists. The National Association for Business Economics, a group of academic and business economists, forecast Monday that the United States will grow just 1.8% this year and 1.7% in 2026.

Nearly two-thirds of economists surveyed by NABE said they believe management duties nonetheless slow growth by up to half a percentage point.

China, meanwhile, has escaped the brunt of US tariffs by sending more of its goods to Europe and Asia, rather than to the United States, the IMF said. The value of its currency fell, making its exports cheaper. The International Monetary Fund expects the Chinese economy to grow by 4.8% this year and 4.2% in 2026, the same level as in July.

Gorinchas said China’s economy has become increasingly dependent on exports, while China’s real estate sector continues to struggle under heavy debt burdens.

He added: “It is increasingly difficult to see how this can continue.”

In Europe, Germany is promoting growth by increasing government spending to build its military, Gorinchas said. The International Monetary Fund now expects the 20 countries that use the euro to grow by 1.2% this year, up from its forecast of 1% in July, and 1.1% next year, the same level as three months ago.

The International Monetary Fund is a 191-nation lending organization that works to promote economic growth, financial stability and reduce global poverty.