Currently, global growth is expected to reach just 2.8% in 2025, with trade disruptions and policy changes dragging the outlook for most countries.
Updated forecast accounts for trade development, released by early April, include extensive US tariffs that have raised tariff rates that are effective to levels not seen in decades. The IMF said policy responses from other major economies have been added to what is characterized as rising uncertainty, but have stopped predicting a global recession.
Under this new reference scenario, global growth is projected to be 2.8% in 2025 and 3% in 2026. This is a 0.8 percentage points cut from January’s forecast. Global trade growth fell by 1.5 percentage points to just 1.7 percent, less than half the pace seen in 2024.
Inflation is expected to decline more slowly than expected, with global headline inflation expected to be 4.3% in 2025 and 3.6% in 2026, accompanied by higher costs and ongoing supply disruptions related to tariffs.
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The US growth forecast fell 0.9 percentage points to 1.8 percent in 2025, with almost half of that decline directly attributable to tariffs imposed since February. Growth is expected to be easier to 1.7% in 2026.
At the same time, the IMF raised its US inflation forecast by 1 percentage point, increasing its 3% inflation in 2025 from 2% in January.
China’s growth was reduced to 4% in 2025, falling 0.6 points, mainly due to a suspension of exports and a continuing weakening of domestic demand. Inflation is expected to fall by 0.8 percentage points amid deflationary pressure.
The Euro area is currently up just 0.8% in 2025, with Germany’s forecast falling 0%, down 0.3 points. Spain is the only eurozone outlier, with 2025 forecasts rising just 2.5% with strong consumption data.
The UK is projected to grow from 1.1% to 0.5 percentage points lower than forecast for January 2025. This is because increased borrowing costs and lower consumer spending are still in place. Japan’s growth has been revised to 0.6%, a 0.5-point reduction, linked to a slowdown in global trade.
Emerging market economies are also expected to slow down. The IMF reduced the group’s 2025 growth outlook by 0.5 percentage points to 3.7%. Mexico is facing the most sharp downgrade, with growth rates falling 1.7 percentage points to minus 0.3% in 2025, primarily exposed to US tariffs.
Looking further, the IMF’s five-year global growth forecast is only 3.2%, 3.7% below 3.2%. Without major reforms, the fund says there are few signs of relief on the horizon.
“Speed escalation of trade tensions and uncertainty about future policies will have a major impact on global economic activity,” the IMF said in its report.
It urged the country to restore clarity in trade rules, support demand wherever possible, and invest in long-term productivity to offset rising costs and aging populations.
Policymakers were also encouraged to protect central bank independence, maintain credibility on inflation, and use financial tools with caution. While excavations are ongoing, new shocks or rising expectations of inflation could again strengthen central banks’ policies and complicate recovery efforts.
