The International Monetary Fund (IMF) has upgraded its global economic growth forecast, citing stronger-than-expected performance due to eased US trade tariffs and government measures to stimulate growth.
In its latest report, the IMF projects global growth of 3% in 2025 and 3.1% in 2026, up from its earlier April estimates of 2.8% and 3%. This revision is partly attributed to a surge in US imports earlier in the year, as companies rushed to avoid upcoming tariff hikes, a phenomenon described as trade “front-loading.”
Despite the improved outlook, the IMF cautioned that ongoing trade tensions and elevated tariffs pose a significant threat to future economic activity. It warned that firms may suffer from overstocking, higher storage costs, and the potential for unsold inventory becoming obsolete.
Pierre-Olivier Gourinchas, the IMF’s chief economist, noted that the modest easing of trade tensions had helped support global resilience, but risks remain. “The world economy is still hurting, and it’s going to continue hurting with tariffs at that level,” he said. He also warned that the temporary boost from import stockpiling will likely taper off, potentially weighing on growth in the second half of 2025 and into 2026.
For the UK, growth is expected to remain steady at 1.2% in 2025 and 1.4% in 2026. The country is projected to be the third fastest-growing economy among advanced nations, trailing only the US and Canada.
Inflation globally is predicted to ease to 4.2% in 2025 and 3.6% in 2026, although US inflation could remain high as tariff costs pass through to consumers.
The IMF’s forecast does not account for some newly announced US trade measures, including broader tariffs on sectors like automobiles, steel, pharmaceuticals, and semiconductors. Trade agreements recently reached with Japan and the European Union were also excluded from the latest figures.
“We’ll have to see whether these deals are sticking,” said Gourinchas, hinting at potential further revisions depending on the evolving global trade landscape.
