The International Monetary Fund (IMF) has cut its economic growth forecasts for 2025, saying an increase in tariffs and uncertainty will lead to a “significant slowdown”.
In its latest global outlook, the IMF predicts the global economy will grow by 2.8% this year, down from its previous forecast of 3.3%.
The US has been given the biggest downgrade among advanced economies – growth there is now expected to be 1.8% this year, down from its previous estimate of 2.7%.
And the UK’s growth forecast for 2025 has also been cut – down to 1.1% from the previous prediction of 1.6%
The IMF also said it sees a 40% chance of a recession in the US following the trade war.
Other economists, for example at the Institute for International Finance, now predict the US will enter a recession this year.
These predictions come as top economic policymakers gather in Washington for the spring meetings of the International Monetary Fund (IMF) and the World Bank.
Pierre-Olivier Gourinchas, the IMF’s chief economist, says the global economy “still bears significant scars” from the “severe shocks of the past four years”.
“It is now being severely tested once again,” he adds.
Uncertainty around trade policy was a “major factor” behind the growth downgrades, Gourinchas says.
“Faced with increased uncertainty… many firms’ initial reaction will be to pause, reduce investment and cut purchases.”
The IMF also restated the importance of central bank independence, after the president called the Federal Reserve chair Jerome Powell a “total loser” and demanded interest rate cuts.
These analyses will form the basis for important discussions among finance ministers here at the IMF, and they point the finger at the US’s tariff decisions.
