Posted on 25 Apr 2025
The latest World Economic Outlook (WEO) released by the International Monetary Fund (IMF) on April 22 forecast global growth in 2025 at 2.8%, lower by 0.5 percentage point from its previous forecast issued in January.
"Since late January, many tariff announcements have been made, culminating on April 2, with near universal levies from the United States and counterresponses from some trading partners," the IMF said in the report, adding that the U.S. effective tariff rate has surged past levels of more than a century ago.
Apart from the abrupt increase in tariffs, the surge in policy uncertainty is also considered as a major factor influencing the economic outlook, and the increasing trade tensions and uncertainty will slow global growth significantly, it warned in the report.
The projections incorporate policy announcements up to April 4 from the United States and trading partners, the fund said. For 2026, global growth may reach 3%, as against the forecast of 3.3% in January, according to the report.
The IMF said that these trade tensions will greatly impact global trade, and that global trade growth is expected to more than halve to 1.7% this year from 3.8% in 2024.
Growth in the United States has been reduced to 1.8% this year, slipping by 0.9 percentage point from the projection in the January WEO. For the United States, the tariffs constitute a domestic supply shock, which may reduce productivity and output permanently and increase price pressures temporarily, the IMF noted.
The tariffs could trigger a negative external demand shock for its trading partners, dampening activity and prices. Therefore, the IMF has lowered the growth forecast for China to 4% this year, down 0.6 percentage point from the projection in January.
All countries are negatively affected by the surge in trade policy uncertainty. For 2025, the growth forecast for advanced economies has been lowered to 1.4%, and the growth in emerging markets and developing economies may slow to 3.7%, according to the report.
Growth forecast by selected economies/countries (%)
Economies/Countries | 2024 | 2025E | 2026E |
|
|
|
| ||||
World Output | 3.3 | 2.8 | 3.0 |
|
|
Advanced Economies | 1.8 | 1.4 | 1.5 |
|
|
United States | 2.8 | 1.8 | 1.7 |
|
|
Euro Area | 0.9 | 0.8 | 1.2 |
|
|
Japan | 0.1 | 0.6 | 0.6 |
|
|
Emerging Market | 4.3 | 3.7 | 3.9 |
|
|
China | 5.0 | 4.0 | 4.0 |
|
|
India | 6.5 | 6.2 | 6.3 |
|
|
Russia | 4.1 | 1.5 | 0.9 |
|
|
Source: IMF; (E): Estimated
Note: For India, data and forecasts are presented on a fiscal year basis, with FY 2024/25 (starting in April 2024) shown in the 2024 column. India's growth projections are 6.5% in 2025 and 6.2% in 2026 based on calendar year.
Source:Kallanish
