The International Monetary Fund on Tuesday downgraded its global growth forecast for 2025, citing the growing impact of President Donald Trump’s new tariff measures. The IMF now expects worldwide economic growth to reach just 2.8% this year, down 0.5 percentage points from its January estimate.
The growth outlook for 2026 has also been revised downward, now projected at 3.0%. Speaking in Washington, IMF chief economist Pierre-Olivier Gourinchas warned that the global economy is undergoing a major transformation. “We are entering a new era,” he said. “If sustained, increasing trade tensions and uncertainty will slow global growth.”
The IMF said recent US tariff announcements have severely weakened global trade projections for the year. The World Economic Outlook included tariff data only through April 4, excluding Trump’s most recent hikes—some of which raised tariffs on Chinese imports to 145%.
Another IMF report published Tuesday, the Global Financial Stability Report, said Trump’s erratic tariff strategy has also increased financial system risks. “Global financial stability risks have increased significantly,” it noted, blaming tighter financial conditions and uncertainty stemming from trade policies.
The Fund downgraded its forecast for US economic growth to 1.8% this year—a full 0.9 percentage point drop from January. It attributed the slowdown to trade tensions, policy uncertainty, and declining demand. US inflation is now projected at 3.0% in 2025 and 2.5% in 2026.
Trump’s tariffs are expected to affect key US trade partners. China’s growth forecast was reduced to 4.0%, down from 5.0% last year. Mexico is now expected to shrink by 0.3%, while Canada also faces a weaker outlook. Japan’s economy is projected to grow just 0.6% this year and next.
Europe isn’t spared either. The eurozone’s 2025 growth estimate has been lowered to 0.8%, with Germany expected to post zero growth. Forecasts for France, the UK, and Italy were also downgraded. Spain was a rare bright spot, with growth raised to 2.5%.
The IMF also cut projections for the Middle East and sub-Saharan Africa, though it expects a rebound in 2026 as regional disruptions ease.
