The International Monetary Fund (IMF) has slightly raised its global economic growth forecast for 2025, predicting a modest improvement in global economic conditions. In its latest World Economic Outlook, the IMF projects global growth to reach 3.3% in 2025, maintaining this level through 2026.
This upward adjustment, by one-tenth of a percentage point, reflects cautious optimism in the global economy despite heightened uncertainties.
IMF Chief Economist Pierre-Olivier Gourinchas highlighted in a blog post on Friday that while the overall growth outlook remains largely unchanged from October, significant divergences are emerging among countries. He noted that the global economic landscape is currently shaped by elevated policy uncertainty, especially with many governments recently elected in 2024 and formulating new economic strategies.
For the United States, the IMF has revised its 2025 growth forecast upwards by 0.5 percentage points, bringing it to a robust 2.7%. This adjustment signals a stronger-than-anticipated economic recovery, likely driven by resilient domestic consumption and investment. On the other hand, the Eurozone’s growth forecast has been downgraded by 0.2 percentage points to a modest 1%, reflecting challenges such as persistent inflationary pressures and structural inefficiencies within some member states.
Emerging market economies, particularly in sub-Saharan Africa, present a more stable outlook. The IMF expects growth in the region to accelerate to 4.2% in 2025, supported by recovering commodity prices, increased foreign investment, and structural reforms aimed at enhancing economic resilience. This steady progress in sub-Saharan Africa underscores the region’s potential as a significant driver of global growth in the coming years.
On the inflation front, the IMF forecasts a continued decline in global inflation rates, projecting a drop to 4.2% in 2025 and further down to 3.5% in 2026. This deceleration is expected to pave the way for a gradual normalisation of monetary policies worldwide, easing the economic disruptions experienced in recent years. Central banks in both advanced and emerging economies are likely to recalibrate their interest rate policies, creating a more conducive environment for sustained economic growth.
However, global trade remains a point of concern. The IMF has revised its world trade volume estimates slightly downward for 2025 and 2026, citing a sharp increase in trade policy uncertainty. The report warns against the potential intensification of protectionist policies, including a new wave of tariffs and non-tariff barriers. Such measures could exacerbate trade tensions, undermine investment flows, reduce market efficiency, and disrupt supply chains, reversing the progress made in global economic integration.
Pierre-Olivier Gourinchas emphasised the risks of unilateral protectionist policies, stating that tariffs, subsidies, and non-tariff barriers rarely deliver durable improvements to domestic economic prospects. “Unilateral policies that distort competition can have far-reaching negative effects, lowering investments and reducing efficiency in global markets,” he cautioned. The IMF’s call for multilateral cooperation highlights the need for collective efforts to address global trade challenges and foster a more inclusive and sustainable economic recovery.
Adding to the uncertainties is the upcoming inauguration of US President-elect Donald Trump, who has signalled his intent to impose a 10% tariff on global imports. This proposed policy has raised concerns among global trade stakeholders, as such a measure could lead to retaliatory actions, further straining international trade relations. The IMF’s forecast serves as a timely reminder of the importance of avoiding protectionist measures that could derail the fragile global recovery.
The IMF’s projections also underscore the critical role of policy coordination in navigating the current economic landscape. Governments worldwide are urged to prioritise structural reforms, promote investment in key sectors, and enhance economic resilience. For emerging economies, addressing vulnerabilities such as high debt levels, limited fiscal space, and dependency on commodity exports will be crucial in sustaining growth momentum.
In advanced economies, policymakers must balance the need for fiscal consolidation with measures to support growth and address long-term challenges such as ageing populations and climate change. The IMF’s report highlights the interconnectedness of global economies, where coordinated efforts are essential to addressing shared challenges and achieving sustainable development goals.
The slightly brighter growth forecast is a testament to the resilience of the global economy in the face of persistent challenges. While uncertainties remain, the IMF’s outlook reflects a cautious optimism, offering a glimmer of hope for a more stable and prosperous global economic environment. The path ahead requires decisive action, strategic reforms, and a commitment to multilateralism to ensure that the benefits of growth are shared equitably across nations and regions.
This revised forecast comes at a pivotal moment, with global leaders poised to make critical decisions that will shape the future of the international economic order. The IMF’s emphasis on collaboration and inclusivity serves as a reminder that addressing global challenges requires collective effort and shared responsibility. As the world navigates an increasingly complex economic landscape, the pursuit of sustainable growth and development remains a common goal that unites nations in their quest for a better future.
With these insights, the global community is better equipped to address emerging challenges and seize opportunities for growth and prosperity. The IMF’s projections not only provide a roadmap for economic recovery but also underscore the importance of resilience, adaptability, and cooperation in building a more inclusive and equitable global economy. As nations work together to overcome obstacles and harness their collective potential, the outlook for 2025 and beyond holds promise for a brighter and more sustainable future.
