The latest World Economic Outlook from the International Monetary Fund (IMF) projects a global economic growth of only 2.8% in 2025, a decrease from the earlier forecast of 3.3% predicted in January.
The IMF anticipates a modest growth of 3% in 2026, which is lower than the previous estimate of 3.3%.
The fund foresees a slowdown in the two largest economies, the United States and China. The U.S. economic growth is expected to be at 1.8% this year, a significant decline from the earlier 2.7% forecast and a full percentage point lower than the expansion in 2024. Despite the adjustment in growth projections, the IMF does not predict a U.S. recession, yet indicating the likelihood has increased from 25% to approximately 40%.
China’s growth forecast has been adjusted to 4% for this year and the following year, a decrease of about half a percentage point from previous expectations. This is lower than the Chinese government’s target growth of 5% in 2025.
The IMF attributes these revisions to the impacts of escalated tariffs and the resultant global uncertainty caused by them. The IMF highlights that the effects of the raised U.S. import taxes, which have elevated average U.S. duties to about 25%, are being felt by every nation worldwide.
The updated projections align closely with expectations of many private-sector economists, although concerns of a looming recession are growing among some. Economists at JPMorgan now place the likelihood of a U.S. recession at 60%. Additionally, the Federal Reserve also anticipates a slowdown in growth to 1.7% this year.
Pierre-Olivier Gourinchas, the IMF’s chief economist, mentions that the downward revision has priced-in weakening consumer confidence and consumption indicators. The IMF has also revised its forecast for headline inflation in advanced economies, including the U.S., the United Kingdom, and Canada, to 2.5% for 2025, marking a 0.4 percentage point increase from the January projection. The expected U.S. inflation rate has also been adjusted upwards to 3%, up by 1 percentage point from the initial projection in January.
