London, UK – July 30, 2025 –
The International Monetary Fund (IMF) today released its July 2025 World Economic Outlook Update, offering a cautiously optimistic revised forecast for global economic growth.
The IMF now projects global growth at 3.0% for 2025, a 0.2 percentage point increase from its April projection, and 3.1% for 2026, up by 0.1 percentage point. This upward revision, while welcome, is largely attributed to specific, and potentially tenuous, factors related to global trade dynamics.
According to the IMF, this “tenuous resilience” stems from several key developments:
- Surge in Exports to the US Due to Tariff Concerns: A significant driver of the revised forecast is a stronger-than-expected “front-loading” of exports to the United States. Businesses, anticipating potentially higher US tariffs, accelerated shipments in the first quarter of the year. This surge in exports has provided a temporary boost to economic activity, particularly in regions like Europe and Asia.
- Improved Financial Conditions:
- Global financial conditions have shown improvement, with a general easing of monetary conditions as inflation continues its gradual decline across many economies. This has contributed to a more favorable environment for investment and economic activity.
- US Dollar Depreciation:
- The US dollar has depreciated by approximately 8% since January. This weakening of the dollar has amplified the competitiveness of other countries’ exports, offsetting some of the impact of recent tariff shocks.
However, the IMF was quick to caution that this resilience is “tenuous” and the global economic landscape remains fraught with risks. The current trade environment, in particular, is highlighted as “precarious.” While the US has paused some of the higher tariffs for most of its trading partners, the threat of these tariffs resetting at much higher levels after August 1st or if existing deals unravel poses a significant downside risk.
“The overall picture hides notable cross-country differences,” stated Pierre-Olivier Gourinchas, the IMF’s Chief Economist. He emphasized that while global inflation continues to decline, reaching projected rates of 4.2% in 2025 and 3.6% in 2026, inflation in the United States is expected to remain above target levels.
The IMF’s report underscored that despite the recent upward revisions, global growth at around 3% remains “disappointingly below the pre-COVID average.” Moreover, the ongoing trade uncertainty could increasingly weigh on investment and overall economic activity. The front-loading of exports, while supportive so far, could also leave firms vulnerable if demand for stockpiled goods does not materialize as expected.
Beyond trade, other significant risks to the global economy include persistent geopolitical tensions, which could lead to further supply disruptions, and concerns over high public debt and elevated public deficits in many countries, making them vulnerable to sudden tightening in financial conditions.
The IMF stressed the paramount importance of restoring stability in trade policy to reduce uncertainty and urged all parties to settle trade disputes and agree on clear, predictable frameworks for global trade. Collective efforts, the report concluded, are essential to restore and improve the global trading system for a more robust and sustainable recovery.
