The International Monetary Fund (IMF) has projected global economic growth at 3.0 per cent in 2025 and 3.1 per cent in 2026, as significant policy changes continue to shape the global economic landscape.
This is contained in the IMF’s July 2025 World Economic Outlook (WEO) Update, titled “Global Economy: Tenuous Resilience amid Persistent Uncertainty”, released on Tuesday.
The 2025 projection is 0.2 percentage points higher than the April 2025 WEO forecast, while the 2026 figure is 0.1 percentage points higher, reflecting stronger-than-anticipated economic momentum.
According to the IMF, the upward revisions are driven by:
Front-loaded trade activity in response to anticipated tariff increases,
Lower-than-expected U.S. tariff rates compared to April projections,
Improved financial conditions, partly due to a weaker U.S. dollar, and
Fiscal expansion in several key economies.
Inflation Outlook
Global headline inflation is projected to decline to 4.2% in 2025 and 3.6% in 2026, consistent with the IMF’s earlier forecasts. However, inflation trends vary widely across regions:
The United States is expected to see inflation remain above target, while
Other large economies may experience more moderate price pressures.
Regional Growth Highlights
Advanced Economies
United States: Growth is forecast at 1.9% in 2025 and 2.0% in 2026—an upward revision of 0.1 percentage points—despite cooling private sector demand and lower immigration.
Euro Area: Expected to grow by 1.0% in 2025 and 1.2% in 2026.
Other Advanced Economies: Projected growth of 1.6% in 2025, increasing to 2.1% in 2026.
Emerging Markets and Developing Economies
Growth projected at 4.1% in 2025, slightly easing to 4.0% in 2026.
China: Growth revised upward by 0.8 percentage points to 4.8% in 2025, driven by strong early-year activity and easing of U.S.-China trade tensions.
Sub-Saharan Africa
Growth expected to remain stable at 4.0% in 2025, rising to 4.3% in 2026.
Nigeria: Economic growth is projected at 3.4% in 2025 and 3.2% in 2026.
Other Regions
Middle East and Central Asia: Growth expected at 3.4% in 2025, increasing to 3.5% in 2026.
Latin America and the Caribbean: Growth to slow to 2.2% in 2025, with a modest rebound to 2.4% in 2026.
Emerging and Developing Europe: Growth to remain sluggish at 1.8% in 2025 and 2.2% in 2026.
Risks and Policy Implications
The IMF cautions that risks to the outlook remain tilted to the downside, echoing the concerns raised in April:
A potential rebound in global tariffs could dampen growth,
Prolonged policy uncertainty could weigh on business activity,
Geopolitical tensions may disrupt supply chains and raise commodity prices, and
Higher fiscal deficits or market risk aversion could tighten financial conditions and spark volatility.
However, the Fund notes that upside potential exists:
Successful trade negotiations could lead to reduced tariffs and more predictable trade frameworks, thereby supporting stronger global growth.
The IMF emphasizes that sound and coordinated policy responses are essential to mitigate risks. It calls on governments to:
Instill market confidence and ensure policy predictability,
Maintain price and financial stability,
Rebuild fiscal buffers, and
Pursue critical structural reforms to sustain long-term growth.
