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In a downbeat World Economic Outlook, the IMF has projected that global growth will drop to 2.8% in 2025 and 3% in 2026 due to the announcement of “a series of new tariff measures by the United States and countermeasures by its trading partners.”
“Following an unprecedented series of shocks in the preceding years, global growth was stable yet underwhelming through 2024 and was projected to remain so in the January 2025 World Economic Outlook (WEO) Update. However, the landscape has changed as governments around the world reorder policy priorities. Since the release of the January 2025 WEO Update, a series of new tariff measures by the United States and countermeasures by its trading partners have been announced and implemented, ending up in near-universal US tariffs on April 2 and bringing effective tariff rates to levels not seen in a century…The swift escalation of trade tensions and extremely high levels of policy uncertainty are expected to have a significant impact on global economic activity,” the Fund said.
The projections represent a downward shift from the 3.3% projected for both years in its January 2025 World Economic Outlook.
The Fund said that tariffs on their own would represent a “major negative shock to growth”, but added that “the unpredictability with which these measures have been unfolding also has a negative impact on economic activity and the outlook and, at the same time, makes it more difficult than usual to make assumptions.”
Given the complexity and fluidity of the current moment, this report presents a “reference forecast” based on information available as of April 4, 2025 (including the April 2 tariffs and initial responses), “in lieu of the usual baseline,” the Fund said.
Emerging markets hit
Growth is expected to slow across the globe: emerging markets and developing economies will see growth slowing down to 3.7% in 2025 and 3.9% in 2026, with significant downgrades expected for countries affected most by recent trade measures, such as China.
1.4% growth is projected for advanced economies in 2025 and 1.8% for the United States, 0.9% lower than the US projection contained in the WEO Update of January 2025. The euro area will see growth slow by 0.2% to 0.8%.
Commenting on the effect of the slow pace of growth on inflation, the IMF noted that “global headline inflation is expected to decline at a pace that is slightly slower than what was expected in January, reaching 4.3% in 2025 and 3.6% in 2026.”
To counter the slow pace of growth the IMF advised that countries should work “constructively to promote a stable and predictable trade environment, facilitate debt restructuring, and address shared challenges.”
They also advised that there should be a focus on addressing “domestic policy and structural imbalances” in order to ensure “internal economic stability”.
African momentum interrupted
Hervé Ndoba, the Central African Republic’s minister of finance and budget and chair of the African caucus of finance ministers and central bank governors, and Kristalina Georgieva, managing director of the IMF, issued a joint statement at the conclusion of the IMF’s African Consultative Group meeting.
“While growth in Africa is showing some resilience in the face of multiple shocks, the sudden shift in the global outlook has interrupted the growth momentum. Growth on the continent has been revised down by 0.3 percentage points to 3.9 percent for 2025. The strong policy actions that have been taken to bring down inflation, stabilize public debt, and reduce external imbalances risk being undone in the face of further shocks. Risks to the outlook are high amid elevated uncertainty and there are significant differences across countries, with fragile and conflict affected states facing particularly acute challenges.”
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