IMF boosts 2025 growth outlook as trade tensions ease
Global Growth Forecast Rises Amid Trade Restraints
The International Monetary Fund boosted its 2025 world growth projection to 3.0 percent, a lift from 2.8 percent announced earlier. A 3.3 percent expansion in 2024 positioned the global economy for a 3.1 percent rebound in 2025.
Trade Tension Eased, Yet Caution Matters
- Tariff Throttle: Donald Trump’s sweeping duties triggered a surprise trade surge.
- Forward‑Loaded Stock: Businesses pre‑empted tariffs by stocking shelves early, a maneuver that could dampen activity later in 2026.
- Fragmented Resilience: Growth still steadied, but tariff distortions, not core strength, underpinned the performance.
US Tariff Dynamics
Trump’s 10 percent levy on most trade partners and higher duties on autos, steel and aluminum raised the U.S. effective tariff rate to 17.3 percent. A pause in higher tariffs until August 1, coupled with a 90‑day truce with China, temporarily lowered tensions.
Potential Risks
- Re‑unraveling of trade deals could shave 0.3 percent from global output in 2026.
- US inflation may remain above target due to supply shocks from tariffs.
- China’s growth, revised to 4.8 percent, still faces weak domestic demand, low consumer confidence and a property‑sector slump.
Regional Outlook
- U.S. 2025 Growth: Revised upward by 0.1 percent to 1.9 percent, supported by Trump’s tax and spending bill.
- Euro Area: Growth nudged 0.2 percent higher to 1.0 percent, aided by Irish pharmaceutical exports.
- Russia: Forecasted at 0.9 percent, down 0.6 percent due to policy shifts and subdued oil prices.
