Global growth is set to slow slightly in 2025, according to the latest outlook from the International Monetary Fund (IMF). The organization has adjusted its forecast to 3.2% growth for 2025, down marginally from 3.3% in 2024 but still reflecting a global economy showing more resilience than initially expected. The IMF highlights that some policy shifts and trade tensions, especially between the U.S. and China, have so far been less damaging than feared, though risks linger that could disrupt this modest momentum.
The IMF’s World Economic Outlook report released in October 2025 signals a cautious tone. While global growth remains subdued, with advanced economies predicted to expand around 1.5% and emerging markets just over 4%, the forecast for 2026 anticipates a further slowing to 3.1%. The report attributes recent upgraded projections partly to softened tariff impacts, owing to some recent trade agreements and tariff adjustments. Early this year, businesses rushed to front-load inventories in anticipation of tariffs, a factor that temporarily boosted activity but will fade as time passes. Inflation globally is expected to continue its downward trend, though the United States stands out with inflation remaining above target and risks tilted to the upside there.
Despite these relatively positive revisions, the IMF is clear that the economic landscape is fragile and uncertainties remain high. Prolonged geopolitical tensions, including ongoing concerns over U.S.-China relations, pose a significant risk to stable growth. The IMF specifically cautions that new tariffs recently implemented on goods such as furniture and lumber, along with the threat of escalating trade conflicts, could reverse the modest gains seen so far. The global economy’s resilience is still being tested by protectionist measures and supply chain disruptions that weigh on business confidence and investment. Monetary and fiscal policies will need to navigate this complex environment carefully to avoid setbacks.
In the United States, growth is expected to slow to about 2% this year, a notable drop from 2.8% in 2024. The eurozone is poised for a slight pick-up in growth to just under 1%, while Japan’s economy is gaining some traction with an estimated growth rate of 1.1%. China’s growth faces downward pressure as weak domestic demand combines with trade tensions, leading to a revised forecast of 4.8% growth in 2025 and a further slowdown in 2026 to 4.2%. These figures underscore how regional dynamics differ markedly, with emerging markets grappling with internal challenges and external trade frictions.
Inflation remains a challenging factor globally. The IMF remarks how inflationary pressures are easing in many parts of the world but continue to worry policymakers, especially in the United States where price rises are climbing again. Part of this upward inflation pressure is linked to tariffs moving from being absorbed within supply chains to being passed directly onto consumers. This shift signals a more entrenched cost impact of trade disputes on everyday goods, adding complexity to economic management.
The IMF emphasizes that given these ongoing challenges, restoring market confidence hinges on credible, transparent, and sustainable policy actions. Trade diplomacy will need to be complemented with macroeconomic adjustments, rebuilding fiscal buffers, protecting central bank independence, and accelerating structural reforms that can boost medium-term growth prospects. The report notes the importance of carefully balancing opportunities and costs, particularly when it comes to industrial policies that aim to raise productivity while avoiding unintended fiscal burdens. ​
Even with risks looming, the IMF’s upgraded forecast illustrates that the global economy has not sunk under the weight of tariffs and trade tensions as severely as some had feared earlier this year. That said, the persistent uncertainty means that economic participants, from governments to businesses, must remain vigilant. The path ahead demands cautious navigation amid a complex mix of policy shifts, geopolitical strains, and evolving inflation dynamics.
Growth in 2025 is expected to be modest but meaningful, painting a picture of an economy adjusting to new realities rather than collapsing under them. With policymakers urged to act decisively and transparently, the key question remains whether this fragile balance can hold long enough for more sustainable gains to take root.
