London, UK – 12 August 2025
The global economy is expected to grow at a modest 3.0% in 2025, according to the International Monetary Fund’s latest World Economic Outlook (WEO) update, a figure that signals a delicate and uncertain path ahead. While the projection represents a slight upward revision from the IMF’s previous forecast in April, the report is laced with warnings about a “tenuous resilience” in the face of persistent geopolitical tensions, rising trade protectionism, and fiscal vulnerabilities. The IMF has stressed that while the world economy has so far avoided a more severe downturn, the underlying robustness of the recovery is questionable.
The new forecast of 3.0% for 2025 and 3.1% for 2026 is an increase of 0.2 and 0.1 percentage points, respectively, from the April 2025 WEO. IMF Chief Economist Pierre-Olivier Gourinchas attributed the improved outlook to a confluence of factors, including a stronger-than-expected “front-loading” of economic activity in anticipation of higher tariffs, an improvement in financial conditions partly due to a weaker U.S. dollar, and expansionary fiscal policies in several major economies. The report also cited a less severe-than-anticipated impact from new U.S. tariffs, which it had previously warned would significantly harm global growth.
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Despite this slight optimism, the report’s tone is decidedly cautious. The IMF projects global growth to be below the 3.3% rate achieved in 2024 and significantly lower than the pre-pandemic historical average of 3.7%. The title of the July report, “Tenuous Resilience amid Persistent Uncertainty,” reflects the underlying fragility of the global economy. The IMF highlighted several key risks that could derail this growth trajectory, with geopolitical tensions being a primary concern. The ongoing conflicts in Ukraine and the Middle East, as well as heightened political instability in Latin America, are cited as major factors that could disrupt supply chains, inflate commodity prices, and undermine business confidence.
Another major source of uncertainty is the proliferation of trade barriers and protectionist policies. While the IMF noted that the impact of new tariffs has been less severe than initially feared, it warned that the overall level of tariffs remains high and could escalate, especially if trade negotiations and agreements falter. The IMF’s analysis indicates that a rebound in effective tariff rates could lead to a significant drag on global growth, potentially dislocating global supply chains and creating inflationary pressures. This sentiment is particularly relevant given the political climate in the U.S., where trade policy remains a central point of debate and is a key variable in the global economic outlook.
The report also pointed to significant fiscal vulnerabilities, particularly in advanced economies. Several countries, including the U.S. and France, are projected to run large fiscal deficits in the coming years. The IMF warned that this could result in higher interest rates, which would in turn tighten global financial conditions and slow growth. The report urges countries to implement gradual but credible fiscal adjustments to reduce public debt and rebuild financial buffers.
In terms of regional performance, the IMF’s projections show a mixed picture. The U.S. economy, for instance, has outperformed expectations, with its growth forecast for 2025 raised to 1.9%, but its medium-term prospects are overshadowed by fiscal and trade risks. China’s growth is projected to continue its gradual slowdown, while the Eurozone’s outlook remains subdued due to a combination of high energy prices and ongoing inflationary pressures. The report also highlights the divergent paths of emerging markets and developing economies, with some regions, like the Middle East and North Africa, showing signs of strengthening due to oil expansion, while others struggle with debt and political instability.
The IMF’s policy recommendations are a call for renewed international cooperation and domestic fiscal prudence. The report stresses the need for central banks to maintain their independence and focus on bringing inflation down to target levels. It also recommends that governments implement structural reforms to boost long-term productivity and address fiscal vulnerabilities. The overarching message is clear: while the global economy has shown a degree of resilience, it is not on a stable or predictable path, and a coordinated effort is needed to navigate the challenges that lie ahead.
