The International Monetary Fund on Tuesday lifted its outlook for global growth this year, flagging a milder-than-expected economic hit from President Donald Trump’s tariff policies while warning of risks ahead.
In its flagship World Economic Outlook (WEO) report — compiled before the most recent US-China tariff spat — the IMF hiked its 2025 global growth forecast to 3.2 per cent, up from 3.0 in July, while leaving its prediction for 2026 unchanged at 3.1 per cent.
The global inflation rate is expected to remain elevated at 4.2 per cent this year, and 3.7 per cent in 2026, underpinned by elevated inflation in several countries including the United States.
“The tariff shock itself is smaller than initially feared,” IMF chief economist Pierre-Olivier Gourinchas told reporters in Washington on Tuesday, adding that the private sector had also supported growth by responding to Trump’s tariffs in an agile way.
Other factors, including the AI boom and fiscal policies in Europe and China had also helped to prop up the global economy, he said.
But, he warned, “the tariff shock is here, and it is further dimming already weak growth prospects.”
Since returning to office, Trump has imposed sweeping tariffs on top trading partners including China and the European Union in a bid to reshape US trading relationships and boost domestic manufacturing.
Over the weekend, the US president threatened fresh tariffs of 100 per cent on China, on top of current steep levies, criticizing Beijing’s recent decision to tighten export controls on the rare earth minerals crucial to the defence and high-tech sectors.
“Everything is very fluid,” Gourinchas told AFP in an interview. “But I think it’s a very useful reminder that we live in a world in which this kind of increase in trade tensions, increase in policy uncertainty, can flare up at any time.”
AFP
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