Washington: The International Monetary Fund (IMF) slightly raised its global growth forecasts for 2025 and 2026, reflecting stronger-than-expected purchases ahead of the US tariff hike on August 1 and a decline in the US effective tariff rate from 24.4 percent to 17.3 percent.
In a statement Tuesday, the IMF warned that the global economy faces significant ongoing risks, including the potential for higher tariff rates, geopolitical tensions, and rising fiscal deficits that could raise interest rates and tighten monetary policy globally.
The IMF revised its global growth forecasts upward by 0.2 percentage points to 3 percent for 2025 and by 0.1 percentage points to 3.1 percent for 2026, lower than its January forecast of 3.3 percent for both years and the pre-pandemic historical average of 3.7 percent.
The IMF said that global inflation is expected to decline to 4.2 percent in 2025 and 3.6 percent in 2026, noting that inflation is likely to remain above target in the United States as the impact of tariffs reaches American consumers in the second half of the year.
It explained that such future tariff increases are not reflected in the current figures and could lead to further increases in effective tariff rates, disrupt supply chains, and reinforce the impact of higher tariffs.
The IMF's growth forecast for China was raised by 0.8 percentage points, reflecting stronger-than-expected activity in the first half of the year and a significant reduction in tariffs between the United States and China after Washington and Beijing announced a trade agreement.
According to the statement, the International Monetary Fund (IMF) raised its growth forecast for China in 2026 by 0.2 percentage points to 4.2 percent, adding that overall growth in emerging markets and developing economies is expected to reach 4.1 percent in 2025, then moderate to 4 percent in 2026.
The IMF also revised its global trade forecast upward by 0.9 percentage points to 2.6 percent but lowered its 2026 forecast by 0.6 percentage points to 1.9 percent.
