The International Monetary Fund has delivered a modest boost to global sentiment, raising its 2025 growth forecast to 3.2% from 3.0%. Despite trade tensions, a US government shutdown, and ongoing battles over semiconductors, the world economy appears to be slightly more resilient than it did just two months ago.
According to the IMF, the upward revision reflects the fact that tariffs and financial shocks have inflicted less damage than initially feared. Still, the fund cautions that the outlook could quickly reverse if US President Donald Trump proceeds with previously floated proposals for 100% tariffs on goods from China and possibly other regions. Think of it as the economic equivalent of an October weather forecast: “Still warm, but keep your umbrella and winter coat close.”
IMF Chief Economist Pierre-Olivier Gourinchas emphasized that trade deals between the US and its partners have helped stave off what he called “Trump’s trade earthquake.” Nevertheless, the fund remains uneasy. A significant expansion of tariffs could result in a 0.6% decrease in global GDP by 2028. This loss would be roughly equivalent to the world taking an involuntary short-term economic vacation.
Country-level growth remains uneven:
The US economy is projected to grow a modest but steady 2% in 2025
The eurozone is expected to expand by 1.2%, buoyed by Spanish optimism and German fiscal stimulus
Japan is expected to grow by 1.1%, which is nearly miraculous by its own standards
China remains in a state of “stable unease,” with growth forecast at 4.8%
According to the IMF, Russia will post a subdued 0.6% gain, yet still outpacing some European peers. Overall, the global recovery continues, albeit at a subdued pace.
Meanwhile, inflation remains stubborn. The global average is projected to hover around 4.2%, a level analysts increasingly describe as the “new normal” in the post-tariff era.
