IMF cuts global growth forecast by 0.5% amid U.S. tariffs: ‘New era’
Global News
The IMF said that the global economy will grow just 2.8 per cent this year, down from its forecast in January of 3.3 per cent, according to its latest World Economic Outlook.
The U.S. and global economies will likely slow significantly in the wake of President Donald Trump’s tariffs and the uncertainty they have created, the International Monetary Fund said Tuesday.
The IMF said that the global economy will grow just 2.8 per cent this year, down from its forecast in January of 3.3 per cent, according to its latest World Economic Outlook. And in 2026, global growth will be three per cent, the fund predicts, also below its previous 3.3 per cent estimate.
And the Fund sees the world’s two largest economies, China and the United States, weakening: U.S. economic growth will come in at just 1.8 per cent this year, down sharply from its previous forecast of 2.7 per cent and a full percentage point below its 2024 expansion. The IMF doesn’t expect a U.S. recession, though it has raised its odds of one this year from 25 per cent to about 40 per cent.
China is now projected to expand four per cent this year and next, down roughly half a point from its previous forecasts.
“We are entering a new era,” Pierre-Olivier Gourinchas, chief economist at the IMF, said. “This global economic system that has operated for the last eighty years is being reset.”
The forecasts underscore the widespread impact of both the tariffs and the uncertainty they have created. Every country in the world is affected, the IMF said, by hikes in US import taxes that have now lifted average U.S. duties to about 25 per cent, the highest in a century.
The forecasts are largely in line with many private-sector economists’ expectations, though some do fear a recession is increasingly likely. Economists at JPMorgan say the chances of a U.S. recession are now 60 per cent. The Federal Reserve has also forecast that growth will weaken this year, to 1.7 per cent.
The IMF is a 191-nation lending organization that works to promote economic growth and financial stability and to reduce global poverty.
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