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Tariffs

Global Economic Outlook Shows Modest Change Amid Policy Shifts and Complex Forces

Strategic Insights

— 1 min read

The International Monetary Fund (IMF) has increased its 2025 global growth forecast to 3.2 percent, warning against unrest due to changes in financial and trade policies. The IMF's October 2025 World Economic Outlook report indicates that the global economy is adjusting to a new policy landscape, with some extreme tariffs being tempered by subsequent deals and resets. However, the overall environment remains volatile, and temporary factors that supported activity in the first half of 2025 are fading.

Key Takeaways:

  • The IMF has increased its 2025 global growth forecast to 3.2 percent, a revision upward relative to the April 2025 WEO but a downward revision relative to the pre-policy-shift forecasts.
  • Global growth is projected to slow from 3.3 percent in 2024 to 3.2 percent in 2025 and 3.1 percent in 2026, with advanced economies growing around 1.5 percent and emerging market and developing economies just above 4 percent.
  • Inflation is projected to continue to decline globally, though with variation across countries, with the United States experiencing inflation above target and risks tilted to the upside.
  • Risks are tilted to the downside, with prolonged uncertainty, more protectionism, and labor supply shocks potentially reducing growth, and fiscal vulnerabilities, potential financial market corrections, and erosion of institutions threatening stability.
  • Policymakers are urged to restore confidence through credible, transparent, and sustainable policies, including restoring fiscal buffers, preserving central bank independence, and redoubling efforts on structural reforms.
  • The tariff shock has had a smaller-than-expected effect on global growth so far, but it is still further dimming already lackluster growth prospects, with a slowdown expected in the second half of this year and only a partial recovery in 2026.

Statistics:

  • Revision in global growth forecast to 3.2 percent in 2025 (up from 3.1 percent in April 2025 WEO)
  • Global growth projections for 2025 and 2026: 3.2 percent and 3.1 percent, respectively
  • Advanced economies growth rate: around 1.5 percent
  • Emerging market and developing economies growth rate: just above 4 percent
  • Inflation rate in the United States: above target with risks tilted to the upside

Sources:

  • IMF's October 2025 World Economic Outlook report
  • KUNA news agency, WASHINGTON, Oct 14, 2025

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