The International Monetary Fund (IMF) has lowered its growth forecast for the global economy this year to 2.8% from 3.3%, saying that trade tariffs are “a major negative shock.”
Among individual countries, the IMF slashed its 2025 growth projection for China’s economy to 4% this year, down from a projection of 4.6% that was issued only a few months ago.
China’s government in Beijing has set its official economic growth target for 2025 at “around 5%,” though many economists expect downward revisions in the months ahead.
In its new projection, the IMF calls for the U.S. economy to grow only 1.8% in 2025, down 0.9 percentage points from its earlier forecast issued in January of this year.
The Washington, D.C.-based IMF, which is an agency of the United Nations, said that no country is likely to be as negatively impacted by President Donald Trump’s import tariffs as the United States itself.
However, the IMF’s forecast of 1.8% growth in the U.S. this year looks optimistic compared to many private sector forecasts that are calling for a recession in America this year.
For its part, the IMF now places the odds of a U.S. recession at 40%, up from 25% in October 2024.
The agency says that weakening consumer confidence and consumption will drag on the U.S. economy in the months ahead.
“The common denominator is that tariffs are a negative supply shock for the economy imposing them,” wrote the IMF in its latest outlook for the global economy.
Lastly, the IMF revised its expectations for inflation in advanced economies that include the U.S., United Kingdom and Canada to 2.5% for 2025, an increase of 0.4 percentage points from January’s forecast.
The U.S. inflation outlook for 2025 was revised to 3%, up one percentage point from the initial projection in January of this year.