The International Monetary Fund (IMF) has officially warned that the global economy is expected to witness a "significant slowdown" in 2025. This largely owing to President Trump's tariff stance and its impact on increasing global trade tensions.
On Tuesday, IMF released its new World Economic Outlook report and labelled Trump's tariff announcement as "a major negative shock," adding that "the global economy is at a critical juncture” and that "tariffs and uncertainty will lead to a significant slowdown in global growth in the near term."
While the US President has called out for a 90-day pause on the imposition of tariffs, the impact will still remain adverse. For instance, the IMF is anticipating a nearly full percentage point decline in the US's GDP figure, to 1.8% as uncertainties rise in the global macro sphere.
Meanwhile, consumer confidence has also taken a hard hit. The latest US Michigan consumer confidence survey data signalled a decline of 11% or 6.2 points to 50.8 in the April month. During the previous month, the figure stood at 57
On the global front, the IMF is estimating a half-percentage point decline in the overall economic growth, dropping to 2.8% from the previous estimates of 3.3%. Even for the coming year, 2026, the US GDP growth has been downgraded to 1.7%. Global trade growth is also forecast to lose steam, dropping to 1.7% from 3.8% in 2024.
Inflation to remain a pain point
“Ratcheting up a trade war, along with even more elevated trade policy uncertainty, could further reduce near- and long-term growth, while eroded policy buffers weaken resilience to future shocks,” the IMF warned in its report.
While several analysts pointed out that the US economy might bear the brunt of its own tariff rules, inflation could be worse-hit. The international organisation expects the inflation figure to surge to 4% in the largest economy. Plus, other developed nations might not remain immune to the same.
“Central banks need to be particularly vigilant regarding those risks after the recent period of prolonged inflation and should be ready to act forcefully," the report read.
