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4h ago

IMF Lifts 2025 Global Growth Outlook to 3.2% as It Warns on U.S.-China Tariff Escalation

Private-sector adjustments alongside AI investment have softened the tariff shock so far.

The International Monetary Fund logo is seen during the IMF/World Bank spring meetings in Washington, U.S., April 21, 2017. REUTERS/Yuri Gripas
A view of the International Monetary Fund (IMF) logo at its headquarters in Washington, D.C., U.S., November 24, 2024. REUTERS/Benoit Tessier/File Photo
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A general view of the Bank of Japan headquarters in the dusk in Tokyo, Japan January 23, 2025. REUTERS/Issei Kato

Overview

  • The IMF’s World Economic Outlook raises global growth to 3.2% for 2025 and keeps 2026 at 3.1%, with headline inflation at 4.2% in 2025 and 3.7% in 2026.
  • U.S. growth is nudged up to 2.0% in 2025 and 2.1% in 2026, with the Fund noting tariff costs are beginning to filter through to prices.
  • India’s forecast increases to 6.6% for 2025 on a strong first-quarter carryover, then eases to 6.2% in 2026 despite higher U.S. tariffs.
  • IMF officials flag a material downside risk after President Trump threatened 100% tariffs on China following Beijing’s new export controls, with modeled scenarios showing global GDP losses that could reach 1.2 percentage points in 2026 under adverse conditions.
  • The Fund credits front‑loaded imports, supply‑chain rerouting, exemptions, a weaker dollar, fiscal support and an AI investment surge for resilience, while warning an AI-driven market correction could curb investment.