IMF nudges up 2025 growth forecast but says tariff risks still dog outlook

The IMF on Tuesday raised its global growth forecasts for 2025 and 2026 slightly, citing stronger-than-expected purchases ahead of an August 1 jump in U.S. tariffs and a drop in the effective U.S. tariff rate to 17.3% from 24.4%.

But it warned that the global economy faced major risks including a potential rebound in tariff rates, geopolitical tensions and larger fiscal deficits that could drive up interest rates and tighten global financial conditions.

“The world economy is still hurting, and it’s going to continue hurting with tariffs at that level, even though it’s not as bad as it could have been,” said Pierre-Olivier Gourinchas, chief economist at the International Monetary Fund.

In an update to its World Economic Outlook from April, the IMF raised its global growth forecast by 0.2 percentage point to 3.0% for 2025 and by 0.1 percentage point to 3.1% for 2026. That is still below the 3.3% growth it had projected for both years in January and the pre-pandemic historical average of 3.7%, however.

It said global headline inflation was expected to fall to 4.2% in 2024 and 3.6% in 2026, but noted that inflation would likely remain above target in the United States as tariffs passed through to U.S. consumers in the second half of the year.

The IMF added that the global economy was proving resilient for now, but uncertainty remained high and economic activity being recorded pointed to “distortions from trade, rather than underlying robustness.”