The International Monetary Fund (IMF) published the January 2025 World Economic Outlook Update according to which global growth is projected at 3.3% both in 2025 and 2026, below the historical (2000–19) average of 3.7%.
The forecast for 2025 is broadly unchanged from that in the October 2024 World Economic Outlook (WEO), primarily on account of an upward revision in the United States offsetting downward revisions in other major economies.
Global headline inflation is expected to decline to 4.2% in 2025 and to 3.5% in 2026, converging back to target earlier in advanced economies than in emerging market and developing economies.
In the euro area, growth is expected to pick up but at a more gradual pace than anticipated in October, with geopolitical tensions continuing to weigh on sentiment.
In emerging market and developing economies, growth performance in 2025 and 2026 is expected to broadly match that in 2024. With respect to the projection in October, growth in 2025 for China is marginally revised upward by 0.1 percentage point to 4.6 percent.
In India, growth is projected to be solid at 6.5 percent in 2025 and 2026, as projected in October and in line with potential.
In the Middle East and Central Asia, growth is projected to pick up, but less than expected in October.
In Latin America and the Caribbean, overall growth is projected to accelerate slightly in 2025 to 2.5 percent, despite an expected slowdown in the largest economies of the region.
If the adverse effects of tariffs and reduction in the labor force dominate, global activity as well as activity in the United States might be affected negatively in the medium term, IMF said in its analysis in January.
“Uncertainties are high: the effects of each factor would unfold differently across countries, influenced by trade and financial linkages; policy responses to actions taken by other countries could play out in a variety of ways, including an escalation of retaliatory tariffs; and the impacts of different policy combinations or different magnitudes of policy changes could be quite different,” IMF added.
United States President Donald Trump’s new 25% tariffs on imports from Mexico and Canada have taken effect, launching new trade conflicts with the top two US trading partners. After days of suspense, Trump’s 25% tariffs on Canada and Mexico and 20% tariff on Chinese goods came into effect on Tuesday.
Canadian Prime Minister Justin Trudeau announced 25% tariffs on American goods in response to President Donald Trump’s tariffs that are going into effect on Canadian imports.
Canada will slap 25% tariffs on $155bn worth of U.S. goods – starting with tariffs on $30bn worth of goods immediately, while tariffs on the remaining $125bn on American products will come into effect in 21 days’ time.
Chinese Foreign Ministry spokesperson Lin Jian urged Washington to abandon its “tactics” and return to the table for good faith dialogue and cooperation.
“The U.S. once again uses the fentanyl issue as a pretext to threaten China with tariff hikes on its imports. China opposes this move and will do what is necessary to firmly safeguard its legitimate interests,” Lin Jian commented.
