IMF Slashes Global Growth Forecast Amid Rising Trade TensionsApril 29,2025

IMF slashes global growth forecast amid rising trade tensions

Source: CGTN

Attendees at a curtain raiser speech ahead of the International Monetary Fund (IMF) and World Bank Spring meetings at the IMF headquarters in Washington DC, United States, April 17, 2025. /CFP

The International Monetary Fund (IMF) has downgraded its global economic outlook for 2025, warning that escalating trade tensions and deepening policy uncertainty are weighing on growth prospects and pushing the world further into a period of economic fragmentation.

In its latest World Economic Outlook report, the IMF projects global GDP to expand by 2.8 percent in 2025 and rise by 3 percent in 2026, down from the previous prediction of 3.3 percent for both years. These figures marked a substantial slowdown compared to the historical average of 3.7 percent between 2000 and 2019.

The report revealed that advanced economies will be among the hardest hit: Growth in this group is forecasted at 1.4 percent in 2025.

The United States is now expected to grow by 1.8 percent, nearly a full percentage point below the IMF's January forecast.

Growth in the euro area is also expected to slow, with growth revised down slightly to 0.8 percent.

Emerging market and developing economies are expected to slow to 3.7 percent in 2025 and 3.9 percent in 2026.

Kristalina Georgieva, the managing director of the IMF, during a curtain raiser speech ahead of the IMF and World Bank Spring meetings at the IMF headquarters in Washington DC, United States, April 17, 2025. /CFP

The IMF attributed these downgrades to softening demand, greater economic uncertainty and the impact of recently introduced trade restrictions.

The IMF said that effective US tariff rates have now reached their highest levels in a century, following a series of sweeping tariffs in early April. These include steep tariffs on imports, industrial metals and automobiles which have triggered swift retaliation from major US trading partners.

The resulting surge in trade barriers has dramatically altered the global economic landscape, said the IMF.

Beyond the immediate impact on growth, the IMF warned that rising trade tensions have unleashed a host of downside risks on outlook including potential asset market corrections, volatile exchange rate movements, sovereign debt crises especially in low-income countries and potential social unrest driven by prolonged cost-of-living pressures and broader disruptions to the international monetary system.

In its concluding remarks in the report, the IMF called for urgent global coordination to restore stability.

It urged governments to work toward clear and predictable trade policies, strengthen their domestic fiscal positions and implement structural reforms to improve long-term resilience. Central banks must continue to fine-tune their policy tools to balance inflation control with the need to support growth in an increasingly complex global environment, the IMF said.

Source: https://news.cgtn.com/news/2025-04-22/IMF-slashes-global-growth-forecast-amid-rising-trade-tensions-1CMvN2y7JBK/p.html