The International Monetary Fund (IMF) has significantly downgraded its global economic growth forecasts, citing escalating trade disruptions fueled by U.S. tariffs. In its latest report, the IMF cut its 2025 global GDP growth estimate to 2.8%, down from 3.3% projected in January. The 2026 forecast was also revised downward to 3.0% from 3.3%.
The downgrade underscores mounting concern over the ripple effects of Washington’s protectionist policies, which have strained relations with key trading partners including China and the European Union. The IMF warned that the trade frictions are weighing heavily on cross-border commerce and global supply chains, potentially deepening the slowdown.
Country-Specific Downgrades and Inflation Revisions
The United States saw one of the sharpest adjustments, with its 2025 growth projection slashed to 1.8% from 2.7%. The UK’s 2025 forecast was also trimmed to 1.1%, down from 1.6%, although 2026 growth is now expected to tick slightly higher at 1.6% versus the previous 1.5%.
Global inflation is now expected to remain elevated at 4.3% in 2025, moderating to 3.6% in 2026. In the UK, inflation forecasts were revised sharply higher to 3.1% next year, up from the earlier estimate of 2.4%. A return to the Bank of England’s target rate of 2.2% is expected in 2026.
Meanwhile, the IMF anticipates a more cautious approach from the Bank of Japan, projecting a slower pace of rate hikes in response to the destabilizing effects of U.S. tariff policies.
The IMF’s latest outlook reflects growing global unease as trade tensions threaten to derail fragile post-pandemic recoveries, forcing central banks and governments to navigate a more uncertain economic landscape.
