The International Monetary Fund on Tuesday reduced its global development forecast for 2025, citing the increasing influence of President Donald Trump’s new tariff measures. The IMF now expects economic growth to reach only 2.8% this year, which is 0.5 percentage points from its January estimate.
The development approach to 2026 is also revised downwards, which is now estimated at 3.0%. Speaking in Washington, IMF Chief Economist Pierre-Olivier Gourinchas warned that the global economy was going through a major change. “We are entering a new era,” he said. “If continuous, growing trade stress and uncertainty will slow down global development.”
The IMF stated that recently American tariff announcements have severely weakened global trade estimates for the year. The world economic perspective included only tariff data through April 4, except Trump’s most recent hike – some of which increased the tariff on sugar imports by 145%.
Another IMF report published on Tuesday in the Global Financial Stability Report said that Trump’s irregular tariff strategy has also increased the risks of the financial system. “Global financial stability risks have increased significantly,” this noted, blaming strict financial situations and uncertainty arising from business policies.
The fund reduced its forecast for US economic growth this year to 1.8% – a complete decline of a full 0.9 percentage points from January. It attributed the recession to the recession for business stress, policy uncertainty and decreasing demand. US inflation is now 3.0% in 2025 and 2.5% in 2026.
Trump’s tariff is expected to influence major American trade partners. Last year, China’s growth forecast was reduced by 4.0%, which was below 5.0% last year. Mexico is now expected to shrink up to 0.3%, while Canada is also facing a weak approach. Japan’s economy is estimated to increase only 0.6% this year and next year.
Europe is either not spared. Eurozone’s 2025 growth estimated to 0.8%, expected to post zero growth of Germany. The forecasts for France, UK and Italy were also downgrated. Spain was a rare bright place, with the increase by 2.5%.
The IMF also cut projections for the Middle East and Sub-Sahara Africa, although it expects a reversal as ease in regional disruption in 2026.
