Washington: Global economic growth is projected to reach 3.0 per cent in 2025 and 3.1 per cent in 2026, above the reference forecast in the April 2025 World Economic Outlook (WEO), according to the International Monetary Fund’s (IMF) July 2025 WEO update, released today.
According to BERNAMA News Agency, the report titled ‘Global Economy: Tenuous Resilience amid Persistent Uncertainty’ revealed that the 2025 forecast is 0.2 percentage points higher, and the 2026 projection is 0.1 percentage point higher than the April 2025 WEO reference forecast. This reflects stronger-than-expected front-loading in anticipation of higher tariffs, lower-than-announced average effective United States tariff rates, improved financial conditions driven by a weaker US dollar, and fiscal expansion in several major economies.
The IMF also projected that global headline inflation will decline to 4.2 per cent in 2025 and 3.6 per cent in 2026, following a trajectory broadly in line with the April forecast. The report highlighted significant cross-country differences, with inflation expected to remain above target in the US and more subdued in other major economies. Risks to the outlook remain tilted to the downside, as noted in the April 2025 WEO, with a rebound in effective tariff rates potentially dampening growth.
The IMF warned that elevated uncertainty could weigh heavily on activity as deadlines for additional tariffs expire without substantial agreements. Geopolitical tensions could disrupt global supply chains and push commodity prices up. Larger fiscal deficits or increased risk aversion could raise long-term interest rates and tighten global financial conditions, potentially reigniting volatility in financial markets due to fragmentation concerns.
On a positive note, global growth could be boosted if trade negotiations result in a predictable framework and a decline in tariffs. The IMF emphasized the need for policies that bring confidence, predictability, and sustainability by calming tensions, preserving price and financial stability, restoring fiscal buffers, and implementing structural reforms.