IMF slashes global growth forecast amid rising trade tensions

The International Monetary Fund (IMF) has downgraded its global economic outlook for 2025, warning that increasing trade tensions and policy uncertainty are slowing growth and fueling global economic fragmentation.

In its latest World Economic Outlook, the IMF now expects global GDP to grow by 2.8% in 2025 and 3% in 2026 — down from its earlier forecast of 3.3% for both years. This is well below the 2000–2019 average of 3.7%.

Advanced economies are expected to feel the pinch most, with the U.S. growth forecast cut to 1.8% and eurozone growth trimmed to 0.8%. Emerging and developing markets are also projected to slow, with growth expected at 3.7% in 2025.

The IMF blamed softening demand and a surge in trade barriers, particularly recent U.S. tariffs on key imports, which have led to global retaliatory measures. The report said U.S. tariff rates are now at their highest in a century.

The IMF warned of broader risks including market instability, currency volatility, debt crises in poorer nations, and possible social unrest driven by high living costs.

To address these challenges, the IMF urged world leaders to stabilize trade policies, strengthen fiscal health, and implement reforms to boost long-term resilience. Central banks, it said, must carefully balance inflation control with growth support.

Source: CGTN