The International Monetary Fund (IMF) significantly revised down its global economic growth outlook in the April 2025 World Economic Outlook, cutting projected global GDP growth to 2.8% for 2025—a 0.5 percentage point reduction from the January estimate of 3.3%—and forecasting 3.0% for 2026, well below the 2000–2019 average of 3.7%.
The IMF attributed the downgrade primarily to sweeping U.S. tariffs, which have raised trade costs to levels not seen in over a century, and to the heightened uncertainty and policy volatility surrounding global trade. These protectionist moves have disrupted supply chains, spurred retaliatory actions, and weighed on business investment, inflation dynamics, and investor sentiment.
The impact has been particularly acute in the United States, where growth forecasts were slashed from 2.7% to 1.8% for 2025, and to 1.7% for 2026. The IMF also warned that the probability of a U.S. recession increased to approximately 40%, with inflation projected to remain sticky—around 5% by September.
Advanced economies at large are expected to record modest growth of 1.4% in 2025, down from earlier forecasts, while emerging and developing countries are projected to expand by 3.7% this year. China’s growth forecast was lowered to approximately 4.0%, and the euro area faces a sharp downgrade to around 0.8%.
The IMF emphasized that the unpredictability of tariff measures is disrupting trade dynamics and investor confidence. It described the global environment as a “critical juncture” where policy-induced volatility is hindering growth and increasing downside risks.
To mitigate these risks, the IMF urged countries to renew multilateral cooperation, reinforce global trade frameworks, and restore clarity in economic policymaking. It also recommended maintaining central bank independence, rebuilding fiscal buffers, and using targeted tools to stabilize financial markets.
The downward revision signals a delayed and uneven post‑pandemic recovery. Trade disruptions have permeated global supply chains and elevated policy uncertainty, eroding business confidence and dampening investment. With global inflation remaining elevated, central banks face the challenge of balancing between curbing inflation and safeguarding growth.
Visible signs of this vulnerability emerged during the IMF–World Bank Spring Meetings, where leaders echoed growing concerns over rising trade tensions and faltering global momentum. The warning underscores that strong domestic momentum—like labor gains or consumer spending—may be insufficient to sustain global growth if trade barriers persist.
In summary, the IMF’s April forecast marks a notable recalibration of global economic prospects, downgrading projected growth to 2.8% for 2025 and 3.0% for 2026. The driving factors include elevated trade protectionism, volatile policy decisions, and diminished investor confidence. The recommendation is clear: the international community must recommit to peaceful, rules-based trade and policy stability to support a sustained recovery.
