The IMF raised its global growth forecast to 3% for 2025, driven by stronger trade activity and fiscal expansion, while warning of risks from tariffs, geopolitical tensions, and economic uncertainty.
00:00The International Monetary Fund IMF on Tuesday lifted its global growth forecast for 2025 to 3%, 0.2% higher than its projection in April according to an update to its world economic outlook.
00:16Emerging markets and developing economies are now expected to grow by 4.1% in 2025, 0.4% higher than the April forecast according to the latest update.
00:30Meanwhile, the growth projection for advanced economies has been revised upward to 1.5% compared to the earlier estimate of 1.4%.
00:39In particular, growth forecasts for the United States, the Euro area, Japan, Britain, Canada, China, India, Brazil, Mexico, Saudi Arabia and Nigeria were revised upward.
00:49The broad-based upward revision for the year reflects stronger-than-expected front-loading in anticipation of higher tariffs, lower average effective U.S. tariff rates than announced in April,
01:00an improvement in financial conditions including due to a weaker U.S. dollar and fiscal expansion in some major jurisdictions, the update said.
01:08The global economy has continued to hold steady but economy activity points to tariff distortions rather than underlying robustness, the IMF said.
01:17Economic policy uncertainty is predicted to remain elevated this year and next, according to the report, whose projections are based on current trade policies.
01:26Overall, risks to the latest outlook remain tilted to the downside, considering the precarious equilibrium of trade policy stances,
01:34possible escalation of geopolitical tensions, potentially more salient fiscal vulnerabilities and other factors, the update said.
01:41Without comprehensive agreements, ongoing trade uncertainties could increasingly wait on investment and economic activities, Juan Gorinchas.
01:54Global growth has been revised up to 3% in 2025 and 3.1% in 2026,
02:02reflecting stronger-than-expected front-loading, lower tariffs compared to early April, easier financial conditions, including a weaker U.S. dollar, and fiscal expansion in some jurisdictions.
02:15Still, projections remain about 0.2% below our pre-April 2nd forecasts, indicating that the trade tensions are hurting the global economy.
02:28Global inflation continues to decline, reaching 4.2% in 2025 and 3.6% in 2026.
02:37Risks remain tilted to the downside.
02:45A breakdown in trade talks or renewed protectionism could dampen growth globally and fuel inflation in some countries.
02:54Persistent uncertainty may weigh on investment, while geopolitical tensions and fiscal vulnerabilities pose additional threats.
03:02Financial conditions have eased, but they could tighten abruptly, especially in case of threats to central bank independence.
03:11On the upside, breakthroughs in trade negotiations could boost confidence, and structural reforms could lift long-term productivity.
03:19Reducing policy uncertainty is essential.
03:24Reducing policy uncertainty is essential.
03:26This is especially true for trade policy, where the global economy needs clear, transparent and predictable rules.
03:34Many countries need to address fiscal vulnerabilities and rebuild fiscal buffers, even if they face increased spending needs.
03:42Central banks must maintain price and financial stability while preserving independence.
03:49Exchange rate flexibility remains key, even if some tailored interventions may be appropriate in certain cases in line with our integrated policy framework.
04:00Finally, structural reforms that ease policy trade-offs and support long-term growth remain essential to long-term prosperity.
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