IMF cuts 2025 global growth forecast to 2.8% from 3.3%

The International Monetary Fund (IMF) has downgraded its global growth forecast. The world economy is now expected to grow by just 2.8% in 2025. This is a drop from the previous forecast of 3.3% made in January.

This update comes from the IMF’s April 2025 World Economic Outlook (WEO). It cites escalating trade tensions as a major factor. The United States has announced new tariffs, prompting countermeasures from trading partners. These actions are disrupting global supply chains and investor sentiment.

The report highlights growing policy uncertainty as another key issue. Since January, new tariffs have been implemented, leading to near-universal US tariffs by April 2. This situation represents a significant shock to economic growth.

The unpredictability of these measures complicates economic projections. The report provides a "reference forecast" based on information available as of April 4, 2025. It includes various global growth forecasts under different trade policy scenarios.

Global growth is projected to decline further to 3% in 2026. This reflects a cumulative downgrade of 0.8 percentage points from earlier estimates and is below the historical average of 3.7%.

In advanced economies, growth is expected to slow to 1.4% in 2025. The U.S. economy's projection has been notably downgraded to 1.8%. In emerging markets and developing economies, growth may slow to 3.7% in 2025.

Global headline inflation is also expected to decline but at a slower pace than previously thought. Inflation rates are projected at 4.3% for 2025 and 3.6% for 2026.

The IMF warns of intensifying downside risks that could worsen the economic outlook further. A deeper trade war or rising financial instability could harm vulnerable emerging markets significantly.

These countries may face capital flight, currency pressures, and increasing debt burdens due to current conditions. However, reversing or de-escalating trade policies could help revive global growth.

The report emphasizes the need for coordinated policy action among nations. It urges countries to restore predictability in trade and strengthen debt sustainability while addressing long-term challenges like demographic shifts and migration.