Global growth is expected to improve slightly this year, with the International Monetary Fund (IMF) raising its forecast by one-tenth of a percentage point.
In its latest World Economic Outlook, it said it expects global growth to reach 3.3 per cent this year and to remain at this level in 2026.
IMF Chief Economist Pierre-Olivier Gourinchas said in a blog posted on Friday that with many governments newly elected in 2024, economic policy uncertainty is elevated.
He added that although the global growth outlook is broadly unchanged from October, “divergences across countries are widening”.
The US economic growth forecast for 2025 has been revised upward by 0.5 percentage points to 2.7 per cent.
Its forecast for the Eurozone has, however, been downgraded by 0.2 percentage points to 1 per cent.
The growth outlook for emerging market economies remains stable, with the IMF saying it expects growth in sub-Saharan Africa to pick up this year to 4.2 per cent.
It forecasts that global inflation will continue decelerating, dropping to 4.2 per cent in 2025 and 3.5 per cent in 2026.
The IMF said this would allow for a further normalisation of monetary policy and end the global disruptions of recent years.
However, it revised world trade volume estimates slightly downwards for both years due to a sharp increase in trade policy uncertainty.
It warned against an intensification of protectionist policies in the form of a new wave of tariffs.
The IMF said this could exacerbate trade tensions, lower investments, reduce market efficiency, and again disrupt supply chains.
“Unilateral policies that distort competition—such as tariffs, non-tariff barriers, or subsidies—rarely improve domestic prospects durably,” said Gourinchas.
The IMF’s new forecast comes days before the inauguration of US President-elect Donald Trump, who has suggested he will impose a 10 per cent tariff on global imports.
