London, UK – August 18,2025
The International Monetary Fund (IMF) has published a new report detailing a slowdown in global growth for 2025, with a stark warning that the world economy faces renewed inflationary pressures and increased trade tensions. This updated forecast, while a slight upward revision from the IMF’s April report, paints a picture of “tenuous resilience” and a persistent risk-filled landscape.
The Global Outlook
The IMF projects global growth to be 3.0 percent in 2025 and 3.1 percent in 2026. This modest forecast highlights a global economy that is struggling to regain its pre-pandemic dynamism. While the revision from April’s projection is positive, it reflects short-term factors like front-loading ahead of new tariffs and fiscal expansion in some major economies, rather than a fundamental strengthening of the economic foundations. The report specifically notes that growth in emerging market and developing economies is set to slow, offsetting a slight acceleration in advanced economies.
Inflationary and Trade Risks
Despite a general trend of declining headline inflation, the IMF warns that the fight against price increases is not yet won. The report points to sticky services inflation and the lingering risk of supply shocks—particularly from new tariffs—as potential drivers of renewed inflationary pressures. The United States, in particular, is forecast to see inflation remain above target, with tariffs expected to pass through to consumer prices in the latter half of the year.
This fragile economic state is being compounded by a significant increase in trade tensions. The IMF report cites a sharp rise in trade barriers and heightened policy uncertainty as key factors weighing on the global outlook. The possibility of further escalating trade restrictions and retaliatory actions is presented as a major downside risk that could intensify the growth slowdown and disrupt global supply chains. The IMF has consistently warned that the implementation of new tariffs poses a “significant risk” to the global economy.
Policy Challenges Ahead
The report emphasizes that policymakers must navigate a challenging environment. The persistent threats of inflation and trade fragmentation could necessitate more restrictive monetary policies, which in turn could weaken growth. The IMF has urged countries to resolve trade disputes and implement policy changes to address underlying domestic imbalances. For many nations, this means scaling back fiscal outlays and putting debt on a sustainable path to maintain the fiscal space needed to manage future shocks.
