IMF Plans to Revise Global Economic Forecast Amid Trade Tensions

On July 18, 2025, the International Monetary Fund (IMF) announced plans to revise its global economic forecast by the end of the month, acknowledging signs of improved financial conditions and declining inflation. However, IMF First Deputy Managing Director Gita Gopinath cautioned that ongoing trade tensions continue to pose significant risks and maintain high economic uncertainty.

In April 2025, the IMF downgraded its global growth forecast for the year to 2.8%, a reduction from the 3.3% projected earlier in January. This adjustment was primarily attributed to escalating U.S. tariffs and widening trade disputes. The United States had imposed steep import levies, some reaching as high as 145%, leading to retaliatory measures from countries like China, which implemented tariffs up to 125%. These actions have significantly disrupted global trade dynamics and heightened economic uncertainty.

Speaking at the third meeting of the G20 Finance Ministers and Central Bank Governors in KwaZulu-Natal, South Africa, Gopinath highlighted the complex backdrop shaped by these trade tensions. She noted that while there has been evidence of front-loading ahead of tariff increases and some trade diversion, the overall outlook remains uncertain. "While we will update our global forecast at the end of July, downside risks continue to dominate the outlook and uncertainty remains high," Gopinath stated.

Gopinath emphasized the need for policymakers to focus on resolving trade tensions and implementing macroeconomic policies to address underlying domestic imbalances. This includes restoring fiscal space and ensuring debt is on a sustainable path. She also stressed the importance of maintaining central bank independence to ensure price and financial stability. "Structural reforms remain essential to lift medium-term growth and offset demographic shifts, by boosting productivity, supporting job creation, and leveraging new technologies," she added.

Emerging markets and developing economies face particular challenges amid these global trade tensions. Gopinath noted that while capital flows to these economies have remained broadly resilient in 2025 despite increased financial market volatility and policy uncertainty, they remain sluggish, and for many borrowers, financing conditions remain tight. To address these issues, she advocated for timely debt restructuring and the expansion of the G20's Common Framework for Debt Restructuring to include middle-income countries.

The IMF's forthcoming revision of the global economic forecast underscores the delicate balance between improving financial conditions and the challenges posed by ongoing trade tensions. The emphasis on policy reforms, debt restructuring, and support for emerging markets highlights the multifaceted approach required to navigate the current economic landscape.