IMF cuts US growth forecast over trade turmoil

The International Monetary Fund (IMF) lowered its global growth forecast to 2.8% for 2025 and 3% for 2026, down from 3.3% for both years, adding that these rates remain well below the 3.7% average recorded between 2000 and 2019.

US growth is expected to slow to 1.8%, 0.9 percentage points lower than forecast in January, due to rising policy uncertainty, trade tensions, and softer demand momentum.

While the IMF not yet predicting a recession, Chief Economist Pierre-Olivier Gourinchas told reporters that the IMF now sees a 40% chance of recession in the US, up from 25% in October.

Advanced economies are expected to grow by 1.4% in 2025, down from 1.8% in 2024. Growth in emerging and developing markets will slow to 3.7%, from 4.3%, with sharp cuts in countries most affected by recent trade actions.

In its World Economic Outlook report, the IMF warned that the rapid escalation in trade tensions and elevated political uncertainty would have a significant impact on global economic activity.

Moreover, the IMF expects global headline inflation to decline at a slower pace than January estimates, to reach 4.3% in 2025 and 3.6% in 2026, with upward revisions for advanced economies and downward adjustments for emerging and developing markets.