The International Monetary Fund (IMF) has warned that the global economy could face significant setbacks if trade tensions intensify, despite growth performing better than expected this year.
In its latest World Economic Outlook, the IMF raised its 2025 global growth forecast to 3.2 percent, up by 0.2 percentage points from its July projection. However, the Fund cautioned that renewed tariff disputes or geopolitical frictions could erode these gains.
“The tariff shock is smaller than initially feared, partly because of trade deals and exemptions,” said Pierre-Olivier Gourinchas, IMF’s Chief Economist. “Most countries also refrained from retaliation.”
Gourinchas warned that another wave of trade disruptions could shave 0.3 percent off global output next year, adding that risks also linger around the tech sector’s stock valuations and the sustainability of China’s export-driven economy.
He noted that clearer trade agreements and lower tariffs could help strengthen global output, especially if coupled with domestic policies that foster entrepreneurship and innovation.
Similarly, Tobias Adrian, Director of the IMF’s Monetary and Capital Markets Department, said global financial markets have remained relatively stable since the April selloff, but “macro-financial risks remain somewhat elevated.”
The IMF’s latest outlook and the accompanying Global Financial Stability Report were released during the ongoing World Bank–IMF Annual Meetings in Washington, D.C.
