WASHINGTON: The International Monetary Fund (IMF) on Tuesday raised its global growth forecasts for 2025 and 2026 slightly, citing stronger-than-expected purchases ahead of an Aug 1 jump in US tariffs and a drop in the effective US tariff rate to 17.3pc from 24.4pc.
It warned, however, that the global economy faced major risks including a potential rebound in tariff rates, geopolitical tensions and larger fiscal deficits that could drive up interest rates and tighten global financial conditions.
“The world economy is still hurting, and it’s going to continue hurting with tariffs at that level, even though it’s not as bad as it could have been,” said Pierre-Olivier Gourinchas, IMF chief economist.
In an update to its World Economic Outlook from April, the IMF raised its global growth forecast by 0.2 percentage point to 3.0pc for 2025 and by 0.1 percentage point to 3.1pc for 2026.
However, that is still below the 3.3pc growth it had projected for both years in January and the pre-pandemic historical average of 3.7pc. It said global headline inflation was expected to fall to 4.2pc in 2025 and 3.6pc in 2026, but noted that inflation would likely remain above target in the US as tariffs passed through to US consumers in the second half of the year.
The US effective tariff rate — measured by import duty revenue as a proportion of goods imports — has dropped since April, but remains far higher than its estimated level of 2.5pc in early January.
Published in Dawn, July 30th, 2025
