Economic Outlook: Navigating Inflation and Growth Challenges

The IMF projects modest global growth of 2.8% in 2025 and 3.0% in 2026, with declining inflation rates. Low-income countries could enhance GDP by leveraging tax potential. Global economy faces complexities due to trade tensions, yet improved financial conditions prevail with potential risks persisting.

The International Monetary Fund (IMF) has forecast global economic growth at 2.8% for 2025 and 3.0% for 2026. Despite moderate growth projections, global headline inflation is expected to decline gradually to 4.3% in 2025 and further ease to 3.6% by 2026.

The IMF analysis indicates that low-income countries could potentially boost their GDP by up to 7% by maximizing tax potential. Recent economic indicators underline a complex landscape influenced by ongoing trade tensions and associated economic dynamics.

While cooling demand and reduced energy prices suggest a gradual decline in inflation, there is considerable variability across countries. Despite some improvement due to trade agreements reducing tariffs, potential downside risks maintain a cloud of uncertainty over the economic forecast, with updates expected by the end of July.

(With inputs from agencies.)