The International Monetary Fund (IMF) has shared its global growth forecast for 2025 and 2026 in its April 2025 World Economic Outlook report, revising its expectations for global growth downwards by about 0.8 percentage points compared to the January 2025 report to 2.8 percent in 2025 and three percent in 2026 amid recent trade tensions globally.
The IMF pointed out that the uncertainty and policy unpredictability resulting from the flurry of tariff announcements by the United States was a major driver of the economic outlook and that, if sustained, this abrupt increase in tariffs and attendant uncertainty will significantly slow global growth. However, despite the slowdown, global growth remains well above recession levels and, even though global inflation is revised up by about 0.1 percentage point for each year, the disinflation momentum continues.
In light of the recent events, the IMF downgraded its forecast for US growth by 0.9 percentage points to 1.8 percent in 2025 - a full percentage point down from 2.8 percent growth in 2024 - and by 0.4 percentage points to 1.7 percent in 2026. US neighbors Canada and Mexico, both targeted by a range of Trump's tariffs, also saw their growth forecasts cut. Canada is expected to record 1.4 percent and 1.6 percent growth in 2025 and 2026, compared to the previous forecast of two percent growth each year. The Mexican economy, on the other hand, is expected to shrink 0.3 percent in 2025 and recover by 1.4 percent in 2026.
According to the IMF, the euro area will also show lower growth in the next two years, estimations of which are downgraded by about 0.2 percentage points to 0.8 percent in 2025 and 1.2 percent in 2026, with Germany’s growth stagnant in 2025 and at 0.9 percent in 2026. For Turkey, growth is projected to bottom out in 2025 at 2.7 percent and accelerate to 3.2 percent in 2026, owing to recent pivots in monetary policy.
Looking at Asia, China's growth forecast was cut to four percent for 2025 and 2026, reflecting respective downward revisions of 0.6 percentage points and 0.5 percentage points from the January forecast. Trade tensions and tariffs were expected to drop Japan's economic activity in 2025 by 0.5 percentage points compared to the January forecast, with growth projected at 0.6 percent.
“We should not lose sight of the need for stronger growth. Governments should continue to engage in fiscal and structural reforms that help mobilize private resources and reduce resource misallocation. They should also invest in the digital infrastructure and training necessary to benefit from new technologies such as artificial intelligence,” the IMF stated, commenting on what should be done to sustain economic growth in the current market conditions.