• Delegates arrive at the International Monetary Fund (IMF) building during the World Bank/IMF Spring Meetings at the International Monetary Fund (IMF) headquarters in Washington, Tuesday, April 22, 2025 (AP)

The International Monetary Fund (IMF) has lowered its global growth forecast for 2025 to 2.8%, citing the economic impact of Trump tariffs and rising uncertainty. This marks a 0.5 percentage point drop from its January forecast. The IMF expects global growth to rebound slightly to 3.0% next year, still 0.3% points lower than previously projected.

"We are entering a new era as the global economic system that has operated for the last 80 years is being reset," IMF chief economist Pierre-Olivier Gourinchas said during a press briefing in Washington. He warned that continued trade tensions could further dampen global economic performance.

Trump tariffs increase global financial stability risks

The IMF highlighted that recent tariff increases between the US and China, including the latest hike to 145 percent on Chinese goods, have already slowed global trade growth. While the report includes measures up to April 4, additional tariffs not yet accounted for could further worsen the outlook.

In a separate Global Financial Stability Report, the IMF warned of growing global financial stability risks, driven by tighter financial conditions and heightened economic uncertainty linked to the tariff policies.

US growth outlook cut, inflation forecast rises

The IMF significantly revised down its forecast for US economic growth, projecting it at 1.8% for this year, a sharp 0.9 percentage point reduction. Growth is expected to ease further to 1.7% in 2026. The slowdown is attributed to policy uncertainty, ongoing trade tensions, and weakening demand momentum.

Inflation in the US is now expected to reach 3.0% this year, with a slight decline to 2.5% in the following year. Tariffs are anticipated to push global prices higher, with global inflation forecast at 4.3% for 2025 and 3.6% in 2026.

China, a top US trading partner, is forecast to see economic growth drop to 4.0% this year, down from 5.0% in 2024. Despite increased government spending, new tariffs are expected to weigh heavily on China’s economic momentum.

Mexico’s economy is projected to contract by 0.3%, a significant 1.7 percentage-point downgrade. Canada’s outlook has also worsened, while Japan is expected to grow by just 0.6% this year and next.

Across Europe, growth is expected to slow further, with the euro area forecast at just 0.8 percent this year and 1.2 percent next. Germany is projected to experience no growth, while France, Britain, and Italy have all seen downgrades. Spain is a rare bright spot, with growth upgraded to 2.5%.

The IMF also downgraded the Middle East outlook, though it expects recovery from 2024 as wars and disruptions ease. Sub-Saharan Africa is forecast to see a slight decline in growth to 3.8% this year, followed by a recovery next year.