IMF lowers global growth forecast as uncertainties climb to new highs
The International Monetary Fund (IMF) has lowered its global growth forecast in its April 2025 World Economic Outlook report, released on April 22 as the Spring Meetings of the World Bank Group and IMF began.
The IMF said that global growth is projected to drop to 2.8 per cent in 2025 and three per cent in 2026—down from 3.3 per cent for both years in the January 2025 World Economic Outlook update, corresponding to a cumulative downgrade of 0.8 percentage points, and much below the historical (2000–19) average of 3.7 per cent.
In the April 2025 forecast, growth in advanced economies is projected to be 1.4 per cent in 2025.
Growth in the United States is expected to slow to 1.8 per cent, a pace that is 0.9 percentage points lower relative to the projection in the January 2025 update, “on account of greater policy uncertainty, trade tensions, and softer demand momentum”, while growth in the euro zone at 0.8 per cent is expected to slow by 0.2 percentage points.
In emerging market and developing economies, growth is expected to slow to 3.7 per cent in 2025 and 3.9 per cent in 2026, with significant downgrades for countries affected most by recent trade measures, such as China.
Global headline inflation is expected to decline at a pace that is slightly slower than what was expected in January, reaching 4.3 per cent in 2025 and 3.6 per cent in 2026, with notable upward revisions for advanced economies and slight downward revisions for emerging market and developing economies in 2025.
After enduring a prolonged and unprecedented series of shocks, the global economy appeared to have stabilized, with steady yet underwhelming growth rates, the IMF said.
“However, the landscape has changed as governments around the world reorder policy priorities and uncertainties have climbed to new highs,” it said.
Forecasts for global growth have been revised markedly down compared with the January 2025 update, “reflecting effective tariff rates to levels not seen in a century and a highly unpredictable environment”.
Intensifying downside risks dominate the outlook, amid escalating trade tensions and financial market adjustments, the IMF said.
“Divergent and swiftly changing policy positions or deteriorating sentiment could lead to even tighter global financial conditions,” it said.
“Ratcheting up a trade war and heightened trade policy uncertainty may further hinder both short-term and long-term growth prospects. Scaling back international cooperation could jeopardize progress toward a more resilient global economy.”
At this critical juncture, countries should work constructively to promote a stable and predictable trade environment and to facilitate international cooperation, while addressing policy gaps and structural imbalances at home, the IMF said.
This will help secure both internal and external economic stability, it said.
“To stimulate growth and ease fiscal pressures, policies that promote healthy aging and enhance labor force participation among older individuals and women could be implemented.
“Additionally, productivity growth can be fostered with better integration of migrants and refugees and mitigation of skill mismatches,” the IMF said.
(Photo: Bruno Sanchez Andrade)
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