The International Monetary Fund said global growth has slowed less than originally feared, but the world economy would suffer from further trade tensions.
In its latest World Economic Outlook, the IMF revised its 2025 global growth projection to 3.2 percent, 0.2 percentage points above its previous projection in July.
“The tariff shock is smaller than initially feared, partly because of trade deals and exemptions,” said Pierre-Olivier Gourinchas, IMF chief economist. “Most countries also refrained from retaliation.”
With the effects of the United States’ tariffs already evident, Gourinchas said another round of trade anxieties could cut off about 0.3 percent from global output next year.
The official noted that additional risks stem from the possibility of a sudden repricing of tech stocks, as well as from the sustainability of China’s export-led growth model.
According to Gourinchas, clearer trade agreements and lower tariffs could strengthen output, likewise domestic policies, including those that empower entrepreneurs to innovate and thrive.
IMF Monetary and Capital Markets Department director, Tobias Adrian, observed that global financial markets have recovered since the April selloff and are quite calm despite policy uncertainty.
Speaking on Tuesday at a briefing on the Global Financial Stability Report, he said while financial conditions are easy, “the macro-financial risks remain somewhat elevated.”
The current world economic perspective, which comprises three chapters, was released at the start of the ongoing World Bank and IMF Annual Meetings in Washington, D.C.
