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IMF Projects Global Growth to Remain Steady at 3.3% Through 2025 and 2026

7 months ago
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IMF Projects Global Growth to Remain Steady at 3.3% Through 2025 and 2026

Global economic growth is projected to remain steady at 3.3% in 2025 and 2026, according to the January 2025 World Economic Outlook Update released by the International Monetary Fund (IMF).

However, this forecast is below the historical average of 3.7% (2000–2019) and unchanged from the October 2024 projections.

The report highlights a precarious global growth profile with divergent trends across economies, influenced by varied regional challenges and policy adjustments.

Advanced Economies

United States

The U.S. economy is expected to grow by 2.7% in 2025, a 0.5 percentage point upward revision from October’s forecast.

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The IMF attributes this to robust labor markets, strong wealth effects, and supportive financial conditions. The growth outlook reflects carryover momentum from 2024, with underlying demand remaining resilient. However, growth is forecast to taper to its potential in 2026.

Eurozone

In the euro area, growth is projected to reach 1.0% in 2025, marking a 0.2 percentage point downward revision. Geopolitical tensions, weaker-than-expected manufacturing performance in late 2024, and heightened policy uncertainty are cited as key factors.

Growth is expected to improve slightly to 1.4% in 2026, supported by loosening financial conditions, improved confidence, and stronger domestic demand.

Other Advanced Economies

Growth in other advanced economies remains stable due to offsetting factors. Recovery in real incomes is expected to drive consumption, while heightened trade policy uncertainty curtails investment.

Emerging Markets and Developing Economies

China

China’s growth forecast for 2025 has been revised upward by 0.1 percentage point to 4.6%, reflecting fiscal stimulus announced in November 2024 and carryover effects from 2024.

The projected growth for 2026 stands at 4.5%, with the dissipation of trade policy uncertainty and adjustments to labor supply due to a raised retirement age contributing to stability.

Sub-Saharan Africa

Sub-Saharan Africa is anticipated to experience an upswing in growth in 2025, driven by recovering commodity prices and improved trade conditions.

Emerging and Developing Europe

In contrast, growth in emerging and developing Europe is expected to decelerate in 2025 due to ongoing geopolitical tensions and tighter financial conditions.

Outlook 

While global growth is poised to remain steady, the IMF underscores that geopolitical uncertainties, trade policy tensions, and uneven regional recoveries present significant risks. Policymakers are urged to focus on bolstering confidence and fostering sustainable economic reforms to address these challenges.

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