IMF Upgrades Global Growth Forecast In Latest Outlook

KUALA LUMPUR, July 29 (Bernama) -- Global economic growth is projected to reach 3.0 per cent in 2025 and 3.1 per cent in 2026, above the reference forecast in the April 2025 World Economic Outlook (WEO), according to the International Monetary Fund’s (IMF) July 2025 WEO update, released today.

Titled “Global Economy: Tenuous Resilience amid Persistent Uncertainty”, the IMF report stated that the 2025 forecast is 0.2 percentage points higher, and the 2026 projection is 0.1 percentage point higher than the April 2025 WEO reference forecast.

“This reflects stronger-than-expected front-loading in anticipation of higher tariffs; lower-than-announced average effective United States tariff rates; improved financial conditions driven in part by a weaker US dollar; and fiscal expansion in several major economies,” the report said.

The IMF also projected that global headline inflation will decline to 4.2 per cent in 2025 and 3.6 per cent in 2026, following a trajectory broadly in line with the April forecast.

“The overall picture masks significant cross-country differences, with inflation expected to remain above target in the US and more subdued in other major economies. Risks to the outlook remain tilted to the downside, as noted in the April 2025 WEO,” the report added, warning that a rebound in effective tariff rates could dampen growth.

According to the IMF, elevated uncertainty could start weighing more heavily on activity, as deadlines for additional tariffs expire without progress on substantial, permanent agreements.

“Geopolitical tensions could disrupt global supply chains and push commodity prices up.

“Meanwhile, larger fiscal deficits or increased risk aversion could raise long-term interest rates and tighten global financial conditions,” it said.

Combined with fragmentation concerns, the IMF said this could reignite volatility in financial markets.

“On the upside, global growth could be lifted if trade negotiations lead to a predictable framework and a decline in tariffs.

“Policies need to bring confidence, predictability, and sustainability by calming tensions, preserving price and financial stability, restoring fiscal buffers, and implementing much-needed structural reforms,” it said. 

-- BERNAMA