IMF lifts 2025 outlook but global growth continues to slow
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The news: The International Monetary Fund (IMF) lifted its global growth forecast for 2025 as tariff shocks and financial conditions have remained more benign than anticipated, but warned that the economy is showing signs of strains.
The numbers: In its World Economic Outlook report released Tuesday, the IMF now expects the global economy to grow by 3.2% this year, up from 3% predicted in July, while growth is seen edging down to 3.1% in 2026. Growth has slowed from the 3.3% pace reached in 2024.
The report held Australia’s growth outlook steady at 1.8% for 2025, but pulled back its July projection for 2026 from 2.2% to 2.1% growth. The IMF projects Australia’s real GDP growth to reach 2.3% in 2030.
In the US, the IMF expects economic growth will slow to 2% this year and remain steady at 2.1% in 2026. Euro zone growth is seen picking up to 1.2% this year and 1.1% in 2026. China’s expansion is forecast to downshift to 4.8% in 2025 and 4.2% in 2026.
The context: The report noted that the upgraded forecasts for this year can largely be tied to a burst in activity as households rushed to buy goods ahead of anticipated trade tariffs coming into effect as well as a weaker US dollar that strengthened global trade.
The IMF explained that looking beyond apparent resilience resulting from trade-related distortions and whipsawing growth forecasts from “wild swings” in trade policies, the “outlook for the global economy continues to point to dim prospects, both in the short and the long term.”
What they said: Treasurer Jim Chalmers said the report highlights “the fragile state of the global economy, with downside risks from global policy uncertainty, geopolitical volatility and market dynamics.”
“In the past week alone, we’ve seen a welcome de-escalation of conflict in the Middle East at the same time as we’ve seen a significant escalation in trade tensions…Our engagements with international counterparts and investors are all about managing and making the most of the big shifts shaping the global economy,” Chalmers added.
The source: IMF Outlook
