IMF has revised down its global growth forecast for 2025 to 2.8%, citing rising economic uncertainty triggered by US President Donald Trump's sweeping tariff policies.
The International Monetary Fund (IMF) has sharply revised down its global growth forecast for 2025 to 2.8%, citing rising economic uncertainty triggered by US President Donald Trump's sweeping tariff policies, reported BBC. The IMF warned that the United States would be among the worst-affected advanced economies, with growth now expected to decelerate to 1.8% — a steep drop from the 2.7% estimate it projected as recently as January.
The gloomy outlook comes as finance ministers and central bank governors from around the world converge in Washington for the IMF and World Bank's high-profile spring meetings. The revised projections have sparked renewed concerns over the direction of US economic policy and its ripple effects on global trade and investment.
Pierre-Olivier Gourinchas, the IMF’s chief economist, said the world economy is still reeling from the lasting damage of the COVID-19 pandemic, supply chain disruptions, geopolitical tensions, and inflation shocks. "It is now being severely tested once again," he said, pointing to the resurgence of protectionism and erratic policy shifts in major economies.
Gourinchas noted that a key driver of the downward revisions is uncertainty around trade policy, which has resurfaced as a dominant theme under Trump’s second term. “Faced with increased uncertainty, many firms’ initial reaction will be to pause, reduce investment and cut purchases,” he explained.
The IMF also warned that Trump's reimposed and expanded tariffs — targeting a wide array of imports, including Chinese goods and some European products — risk igniting a new wave of trade wars, undermining confidence and cross-border investment at a precarious time.
Markets have already shown signs of reacting negatively. On Monday, US stock indices plunged, and the dollar weakened sharply after President Trump lashed out at Federal Reserve Chairman Jerome Powell. In a social media post, Trump called Powell a “major loser” for not cutting interest rates fast enough, a move investors interpreted as a signal of deeper political interference in monetary policy.
The IMF report highlights how the confluence of aggressive trade actions, policy unpredictability, and political tensions is weighing heavily on global economic momentum. While some emerging markets may weather the turbulence with relative resilience, the broader picture, according to the IMF, points to a fragile and fragmented recovery.
The Fund urged global leaders to prioritize policy coordination, de-escalate trade tensions, and restore predictability to the global economic environment to avoid a deeper slowdown.