IMF Downgrades Global Growth Outlook to 2.8% for 2025 Amid Heightened Policy Uncertainty and Trade Tensions
Global economic growth is projected to decelerate to 2.8% in 2025 and 3% in 2026, according to the International Monetary Fund’s (IMF) April 2025 World Economic Outlook (WEO) report.
The revised projections mark a significant downgrade from the 3.3% growth forecast for both years in the Fund’s January 2025 WEO Update. The cumulative reduction of 0.8 percentage points brings global growth well below the historical average of 3.7% recorded between 2000 and 2019.
“Intensifying downside risks dominate the growth outlook for 2025,” the IMF warned, citing a confluence of macroeconomic challenges, including persistent trade frictions, increased policy uncertainty, and diminished global demand momentum.
In advanced economies, economic activity is expected to slow markedly, with overall growth forecast at 1.4% in 2025. The United States is projected to grow at 1.8%, representing a steep downward revision of 0.9 percentage point from the January forecast. The Fund attributes the decline to mounting policy uncertainties, escalating trade tensions, and weaker consumer demand.
The euro area is also projected to experience a slowdown, with growth revised downward by 0.2 percentage point to 0.8% for 2025.
Emerging market and developing economies (EMDEs) are similarly expected to lose growth momentum, with economic expansion forecast at 3.7% in 2025 and 3.9% in 2026. The IMF noted that countries most affected by recent trade measures, particularly China, face the sharpest downward revisions.
On the inflation front, global headline inflation is anticipated to decline more gradually than previously projected. The Fund expects inflation to reach 4.3% in 2025 and 3.6% in 2026. Advanced economies are expected to record modest upward revisions in inflation forecasts, while EMDEs are likely to see slight downward adjustments in 2025.
The IMF cautioned that elevated trade policy uncertainty and the erosion of policy buffers are undermining the global economy’s resilience to future shocks.
