Imf warns of weaker global growth amid rising US tariffs

The International Monetary Fund (IMF) has cut its global growth forecast for 2025, citing the economic impact of new U.S. tariffs introduced under President Donald Trump.

The IMF now expects the global economy to expand by just 2.8 percent this year, down 0.5 percentage points from its January estimate.

Next year’s growth projection has also been trimmed, with the global economy now expected to grow by 3.0 percent, 0.3 percentage points lower than previously forecast.

IMF chief economist Pierre-Olivier Gourinchas described the current shift as a significant turning point in the global economy, warning that rising trade tensions and uncertainty could further hinder growth. He noted that the new U.S. tariffs have already halved the Fund’s outlook for global trade growth in 2025.

These updated forecasts were released alongside the IMF’s World Economic Outlook during the Spring Meetings in Washington, which are co-hosted by the IMF and World Bank.

Because of the unpredictability of the tariff rollouts, the IMF set a cutoff date of April 4 for its projections. This means recent tariff hikes—raising some duties on Chinese imports to as much as 145 percent—are not factored into the current figures. The IMF warned that if these tariffs are sustained, global growth could slow even further.

In a separate Global Financial Stability Report, the IMF said the piecemeal introduction of tariffs has increased financial risks globally. It cited tighter financial conditions and greater economic uncertainty as key concerns.

US growth takes a hit

The IMF significantly lowered its U.S. growth projection to 1.8 percent for 2025, a sharp drop of 0.9 percentage points from January’s forecast. Growth is expected to decline further to 1.7 percent by 2026. The downgrade is attributed to increased policy uncertainty, trade friction, and slowing demand.

The Fund also raised its U.S. inflation forecast to 3.0 percent for this year and 2.5 percent for next year. Globally, consumer prices are expected to rise slightly more than previously forecast, reaching 4.3 percent in 2025 and 3.6 percent in 2026.

Major trade partners hit hard

Key U.S. trading partners are also feeling the effects of the tariffs. China’s growth is now projected to slow to 4.0 percent in 2025, despite increased government spending. Mexico is expected to experience a 0.3 percent economic contraction, a 1.7-point drop from earlier forecasts, while Canada’s outlook has also worsened.

Japan, the world’s third-largest economy, is expected to grow by only 0.6 percent in both 2025 and 2026.

Europe’s momentum weakens

In Europe, the IMF has reduced its growth forecast for the eurozone to 0.8 percent for this year and 1.2 percent for next. Germany is expected to record zero growth, while France, the UK, and Italy are also facing lower forecasts.

Spain, however, remains a rare bright spot, with the IMF upgrading its outlook to 2.5 percent growth in 2025.

The Middle East is projected to face slower growth due to ongoing conflicts and disruptions, but a modest recovery is expected starting in 2026. Sub-Saharan Africa is also expected to see a slight dip to 3.8 percent growth this year, with a rebound likely in 2026.