The International Monetary Fund’s report, “World Economic Outlook: Global Economy: Fragile Stability Amid Persistent Uncertainty”, presents updated assessments and forecasts for the global economy for 2025 and 2026.
According to the IMF forecast, global economic growth will be 3% in 2025 and 3.1% in 2026, which is lower than the actual figure for 2024 of 3.3%. Compared to the April issue, the current forecast is more optimistic. This is due to higher-than-expected economic activity at the beginning of the period amid expectations of tariff increases, lower average effective tariffs in the US compared to April estimates, improved financial conditions, including a weaker dollar, and expanded fiscal spending in a number of major economies.
Advanced economies are expected to grow by 1.5% in 2025 and 1.6% in 2026. In the US, economic growth is projected to slow to 1.9% in 2025 amid weaker private demand and a decline in immigration inflows. However, in 2026, growth may accelerate to 2% thanks to increased production volumes resulting from the implementation of the Big Beautiful Bill tax and fiscal measures package. In the euro area, growth is expected to accelerate to 1% in 2025 and 1.2% in 2026. The 0.2 percentage point increase in the forecast for 2025 is due to strong GDP growth in Ireland in the first quarter of this year.
In emerging market and developing economies, growth is forecast by the IMF to be 4.1% in 2025 and 4% in 2026. In particular, China is expected to grow by 4.8% in 2025 thanks to high economic activity in the first half of this year and a significant reduction in tariffs on trade with the US. India is projected to grow by 6.4% in both 2025 and 2026 due to favorable external economic conditions. In the Middle East and Central Asia region, growth is projected to accelerate to 3.4% in 2025 and 3.5% in 2026. In Russia, on the contrary, growth is expected to slow to 0.9% in 2025 and 1% in 2026.
Global inflation is expected to continue to decline, to 4.2% in 2025 and 3.6% in 2026. This is due to weaker demand and lower energy prices. However, inflation forecasts vary from country to country. In the US, consumer price growth will be fueled by tariffs, while in other countries, tariffs may act as a negative demand shock and curb inflationary pressures.
According to the IMF report, if tariffs are further increased from August 1, including the introduction of announced duties on copper of up to 50%, this will have a negative impact on global economic growth. Increased uncertainty in trade policy could slow economic activity, weaken companies’ willingness to invest in maintaining and developing trade links, and, as a result, lead to a slowdown in trade and production growth, especially in export-oriented countries. Geopolitical tensions could disrupt global supply chains and trigger an increase in commodity prices. Global trade growth is expected to slow to 2.6% in 2025 and 1.9% in 2026. Countries such as Brazil, France, and the United States are projected to face significant budget deficits amid record-high levels of public debt. This could lead to higher long-term bond yields and tighter global financial conditions.
To reduce uncertainty in trade policy, countries are advised to promote clear and transparent international trade rules. In this situation, it is important to promote multilateral initiatives aimed at addressing global challenges and, where necessary, to use plurilateral or regional approaches to specific issues. According to the IMF, international cooperation in the field of economic policy can mitigate negative spillover effects between countries and provide support to the most vulnerable economies.
Overall, despite signs of a gradual recovery and a partial improvement in macroeconomic conditions, the global economy remains highly uncertain. In this context, the key tasks for countries remain ensuring predictable economic policies, strengthening international cooperation, and modernizing trade rules to enhance the resilience of the global economy.
* The Institute for Advanced International Studies (IAIS) does not take institutional positions on any issues; the views represented herein are those of the author(s) and do not necessarily reflect the views of the IAIS.
