The International Monetary Fund (IMF) has significantly lowered its global economic growth projections, citing escalating trade conflicts and heightened policy uncertainty, according to its latest World Economic Outlook report released Tuesday.
The IMF now forecasts global growth at 2.8 percent for 2025, a sharp 0.5 percentage points reduction from its January estimate, with a further slowdown to 3 percent projected for 2026.
The downward revision comes as the United States' April 2 announcement of sweeping "reciprocal tariffs" has pushed global tariff rates to century-high levels, creating what the report describes as "a major negative shock" to worldwide economic expansion.
Advanced economies face particular headwinds, with collective growth expected at just 1.4 percent in 2025 and 1.5 percent in 2026. The United States saw the most dramatic revision -- its 2025 outlook slashed by 0.9 points to 1.8 percent due to mounting policy uncertainty, intensifying trade tensions, and softening domestic demand. The eurozone's projection fell 0.2 points to 0.8 percent.
Emerging markets and developing economies, while maintaining relatively stronger growth at 3.7 percent (2025) and 3.9 percent (2026), still suffered downgrades from previous estimates, with the IMF attributing much of the slowdown to ripple effects from U.S. trade measures. The latest forecast for China's growth in 2025 dropped 0.6 percentage points to 4 percent.
The report notes global inflation is expected to moderate, though the pace of decline may be slower than previously anticipated. This combination of sluggish growth and persistent price pressures presents policymakers with complex challenges as they attempt to balance economic support against inflation containment.
IMF downgrades global growth forecast to 2.8 pct in 2025 amid increased tariffs
