IMF Raises Global Growth Forecast for 2025 and 2026 Despite Ongoing Risks

The International Monetary Fund (IMF) has revised its global growth projections upward, forecasting a 3.0% expansion for 2025 and 3.1% for 2026. This adjustment reflects a 0.2 and 0.1 percentage point increase, respectively, from the April 2025 estimates. The IMF attributes this improvement to factors such as accelerated purchasing ahead of anticipated U.S. tariff hikes, a weaker U.S. dollar, and fiscal expansion in certain regions.

IMF Chief Economist Pierre-Olivier Gourinchas stated, "Global growth has been revised up to 3.0 percent in 2025 and 3.1 percent in 2026, reflecting stronger than expected front loading, lower tariff rates compared to early April, easier financial conditions, including a weaker US dollar and fiscal expansion in some jurisdictions." (mediacenter.imf.org)

Despite the positive adjustments, the IMF cautions that growth remains below pre-pandemic averages, with ongoing risks from elevated tariff rates, geopolitical tensions, and rising fiscal deficits. The effective U.S. tariff rate has decreased to 17.3% from 24.4% in April, yet it continues to impact global trade and inflation, particularly in the United States. (reuters.com)

Gourinchas emphasized, "Risks remain tilted to the downside. A breakdown in trade talks or renewed protectionism could dampen growth globally and fuel inflation in some countries." (mediacenter.imf.org)

Regionally, the United States' growth projection has been slightly increased to 1.9% for 2025, supported by fiscal stimulus measures. China's growth forecast has been upgraded to 4.8% for 2025, reflecting improved economic activity and eased tariffs. The Eurozone's growth is projected at 1.0% for 2025, driven in part by increased pharmaceutical exports from Ireland. (reuters.com)

The IMF emphasizes the need for policies that promote confidence, predictability, and sustainability. Key recommendations include reducing policy uncertainty, preserving central bank independence, and implementing structural reforms to support long-term economic growth and resilience. (mediacenter.imf.org)

While the IMF's revised forecasts indicate resilience, the global economy faces ongoing challenges. Coordinated policy efforts are essential to mitigate risks and promote sustainable growth.