Global economy expansion predicted for 2025 at a rate of 3.0% as determined by the International Monetary Fund (IMF)
The International Monetary Fund (IMF) has recently revised its global economic growth projections, with a forecast of 3.0% for 2025 and 3.1% for 2026, according to Pierre-Olivier Gourinchas, the IMF's Economic Counsellor[1][3][4]. This is an improvement from the previous April 2025 forecast, which projected 2.8% and 3.0% respectively.
The upward revision is attributed to several factors. These include stronger-than-expected front-loading by U.S. firms and households ahead of expected higher prices induced by tariffs, lower effective tariff rates than previously anticipated, improved financial conditions, and fiscal expansions in some major jurisdictions[1][4].
However, the growth projections remain about 0.2 percentage points lower than the pre-April forecasts, indicating that ongoing trade tensions and distortions continue to have a significant impact[1][3]. Global growth at around 3% remains below the pre-COVID average, signifying modest but fragile growth overall[3][4].
Risks persist, particularly around possible tariff hikes after the August 1 "pause" expires or if trade deals unravel, which could lower output by 0.3 percentage points in 2026 according to model simulations[3]. Inflation is expected to continue declining globally, down to 4.2% in 2025 and 3.6% in 2026, though US inflation may remain above target[1][4].
Evidence is mounting that the trade shock is hurting the global economy, according to Gourinchas' statement[5]. However, the potential for the trade shock to turn out less severe than initially feared was not mentioned in his statement.
The IMF's revised projections do not provide specific reasons for the U.S.'s decision to impose lower tariffs, nor do they specify the impact of these changes on individual countries' economic growth. The changes in the IMF's projections are likely influenced by adjustments in the assumed U.S. tariff rate, but the IMF's revised projections do not provide a new forecast for the years beyond 2026[1][2].
The IMF's global growth forecast for 2026 has been raised to 3.1%, and the economic growth projection for 2025 is also influenced by the dollar's depreciation providing "monetary policy space for emerging market and developing economies"[2].
In conclusion, the IMF's July 2025 update projects moderately stronger global growth for 2025 and 2026 than earlier expected, but trade tensions and geopolitical risks continue to weigh on the outlook[1][3][4].
[1] IMF (2025). World Economic Outlook Update, July 2025. [Online] Available at: https://www.imf.org/en/Publications/WEO/Issues/2025/07/20/world-economic-outlook-update-july-2025 [Accessed 1 August 2025].
[2] IMF (2025). Press Release, IMF Raises Global Growth Forecast for 2026, 1 August 2025. [Online] Available at: https://www.imf.org/en/News/Articles/2025/08/01/pr20250801 [Accessed 1 August 2025].
[3] Gourinchas, P-O (2025). Speech, Global Economic Outlook: Challenges and Opportunities, 1 August 2025. [Online] Available at: https://www.imf.org/en/Speeches/2025/08/01/global-economic-outlook-challenges-and-opportunities [Accessed 1 August 2025].
[4] IMF (2025). World Economic Outlook Database, July 2025. [Online] Available at: https://www.imf.org/en/Publications/WEO/Issues/2025/07/20/world-economic-outlook-database-july-2025 [Accessed 1 August 2025].
- The IMF's revised global economic growth projections in 2026 suggest a positive trend for the global economy, with an expected growth of 3.1%, attributed partly to improvements in financial conditions and fiscal expansions in some major jurisdictions.
- The growth projections, however, remain lower than the pre-April forecasts, indicating that ongoing trade tensions and distortions have a significant impact, especially around possible tariff hikes.
- Global business leaders and finance experts are closely monitoring the IMF's economic growth forecasts, considering that trade policy and geopolitical risks continue to influence the outlook for the global economy.
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