IMF Upgrades 2025 Global Growth Forecast Amid Trade Risks

The International Monetary Fund has raised its global growth forecast for 2025 due to benign tariffs and financial conditions. However, the escalating U.S.-China trade war, revived by Donald Trump, poses significant risks, potentially reducing future growth and increasing global economic uncertainty, despite resilient U.S. and European outlooks.

The International Monetary Fund (IMF) has modestly increased its global economic growth forecast for 2025, crediting lower-than-expected tariffs and improved financial conditions. However, it warns that President Donald Trump's threats of renewed U.S.-China trade tensions might hinder growth significantly.

The IMF's latest World Economic Outlook cites recent U.S. trade agreements that have sidestepped the worst of threatened tariffs as a key reason for its growth forecast upgrade to 3.2% for 2025. Although tariffs instigated by Trump had initially threatened to plunge growth, a combination of fiscal stimulus in Europe and China, and an AI investment boom have bolstered economic resilience.

Nevertheless, risks loom over the global economy. Trump's proposition to impose 100% tariffs on Chinese imports could exacerbate tensions, jeopardizing the fragile economic environment. Potential escalation could result in notable reductions in growth forecasts, especially in a downside risk scenario that models higher tariffs on goods from China and other key regions, threatening severe economic repercussions.

(With inputs from agencies.)