London, UK – 

The global economy is set for another year of subdued expansion, with the International Monetary Fund (IMF) projecting global growth at a tenuous 3.0% for 2025. This figure, outlined in the latest IMF World Economic Outlook Update from Washington D.C., USA, represents a modest upward revision from earlier forecasts, but the underlying narrative points to a landscape marked by persistent policy uncertainty, trade-related distortions, and inflation that is easing at vastly uneven rates across the world.

Headline Points

 * 3.0% Global Growth for 2025: The IMF forecasts a 3.0% real GDP growth for 2025, which is an upward adjustment from prior projections, though it remains below the 2024 outcome of 3.3% and the pre-pandemic historical average of 3.7%.

 * Inflation Easing—But Not Everywhere: Global headline inflation is expected to continue its decline, but the pace is highly divergent. Advanced economies are on track to hit targets sooner, while inflation in emerging market economies remains significantly higher.

 * Trade Distortions Drive Short-Term Upside: The temporary upward revision to the 2025 growth forecast is largely attributed to technical factors, notably the “front-loading” of trade and investment in anticipation of higher tariffs, rather than underlying economic robustness.

 * Downside Risks Dominate: The outlook is clouded by significant downside risks, including the potential for a rebound in effective tariff rates, high policy-induced uncertainty, and mounting geopolitical tensions, all of which threaten to derail the fragile recovery.

 * Advanced vs. Emerging Economies: Growth paths are diverging, with Advanced Economies projected to grow at a modest 1.5% in 2025, while Emerging Market Economies are expected to see a stronger 4.1% expansion.

Subdued Growth Driven by Temporary Factors

The IMF’s decision to hold the 2025 global growth forecast at 3.0% reflects a period of “Tenuous Resilience amid Persistent Uncertainty.” While a slight increase from the April outlook, the Fund cautions that this minor improvement is largely fueled by one-off and temporary factors related to global trade policy.

Key among these drivers is the phenomenon of “front-loading,” where businesses are accelerating imports and investment ahead of expected new tariff increases. This surge in short-term activity is boosting international trade and investment figures for the first half of 2025, temporarily offsetting more subdued private consumption in major jurisdictions. Other supporting factors include lower-than-anticipated effective U.S. tariff rates, an improvement in general financial conditions, and fiscal expansion in several major economies.

However, the IMF warns that as these trade-related distortions wane, global growth is expected to slow down again, calling the current composition of activity a reflection of tariffs and policy changes rather than genuine, robust economic health.

The Uneven Battle Against Inflation

The report provides a mixed picture on the fight against high prices. The global trend is for inflation to decline, with headline inflation projected to fall to 4.2% in 2025. This continued cooling is expected to allow central banks in some regions to begin a monetary policy normalization process, with policy rate cuts anticipated in the second half of the year for the United Kingdom and the United States, though at varying speeds.

The story, however, is one of wide divergence. Inflation in Advanced Economies is forecast to remain on track toward targets at 2.5% for 2025. In stark contrast, Emerging Market and Developing Economies are projected to face a significantly higher inflation rate of 5.4%. The persistence of services inflation in many regions is also complicating the path to price stability, with the IMF noting that U.S. inflation, in particular, is predicted to remain above target levels.

Widening Economic Gaps

The outlook highlights a widening gap in performance between the world’s major economic blocs. Advanced Economies are collectively forecast to grow at a modest 1.5% in 2025. Conversely, Emerging Market and Developing Economies are expected to be the main engine of global activity, with a projected growth rate of 4.1%, largely driven by upward revisions for key economies like China.

Despite this stronger aggregate number for the emerging world, the IMF warns that the persistent policy shifts and high uncertainty could lead to an abrupt tightening of global financial conditions and capital outflows, disproportionately impacting these very economies.

The report concludes with a clear call for policymakers to address policy gaps, structural imbalances, and work towards a stable and predictable trade environment to secure both internal and external economic stability against a backdrop of elevated risk.