The International Monetary Fund (IMF) has projected global economic growth at 3.0% in 2025 and 3.1% in 2026, citing improving financial conditions, fiscal expansions, and adjustments in global trade policies.
The revised figures were published in the IMF’s July 2025 World Economic Outlook (WEO) Update, titled “Global Economy: Tenuous Resilience amid Persistent Uncertainty”, and reflect an upward revision of 0.2 percentage points for 2025 and 0.1 percentage points for 2026 compared to the April 2025 WEO.
According to the report, the upward revisions are driven by:
Stronger-than-expected front-loading of global trade due to anticipated tariff hikes,
Lower-than-expected average effective U.S. tariffs, and
Fiscal expansion and a weaker U.S. dollar boosting financial conditions in key economies.
Inflation Outlook
Global headline inflation is forecast to ease to 4.2% in 2025 and 3.6% in 2026, maintaining the trajectory projected in April. However, disparities remain:
U.S. inflation is expected to stay above target, while
Other major economies will likely experience more subdued price pressures.
Growth by Region and Country
Advanced Economies:
United States: Growth revised upward to 1.9% in 2025 and 2.0% in 2026.
Euro Area: Modest recovery expected at 1.0% in 2025 and 1.2% in 2026.
Other Advanced Economies: Growth to drop to 1.6% in 2025, before rising to 2.1% in 2026.
Emerging Markets & Developing Economies:
Overall Growth: 4.1% in 2025, slightly easing to 4.0% in 2026.
China: Significant upward revision to 4.8% in 2025 due to strong first-half performance and easing of U.S.-China tariffs.
Sub-Saharan Africa:
Steady growth at 4.0% in 2025, rising slightly to 4.3% in 2026.
Nigeria: Growth projected at 3.4% in 2025 and 3.2% in 2026.
Other Regions:
Middle East and Central Asia: Growth forecast at 3.4% in 2025, improving to 3.5% in 2026.
Latin America and the Caribbean: Expected slowdown to 2.2% in 2025, with a slight 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 Uncertainties
The IMF warns that risks remain tilted to the downside, including:
A potential resurgence of trade tariffs without resolution to ongoing disputes,
Elevated policy uncertainty affecting investor confidence and business activity,
Geopolitical tensions that may disrupt supply chains and drive up commodity prices, and
High fiscal deficits or increased market volatility that could tighten global financial conditions.
However, an upside remains possible if trade negotiations produce a predictable, rules-based framework, easing tensions and reducing tariff-related shocks.
Policy Recommendations
The IMF calls for:
Predictable and confidence-inspiring economic policies,
Measures to ensure price and financial stability,
Restoration of fiscal buffers, and
Implementation of long-term structural reforms.
“These are essential to promote sustainable growth and reduce global economic fragmentation,” the report noted.
