The International Monetary Fund has issued its latest global forecasts, warning that growth is expected to decline and downside risks are set to intensify as major policy shifts unfold.
For advanced economies, the inflation forecast for 2025 has been revised upward by 0.4 percentage points since January. The United Kingdom and the United States stand out in both the direction and the magnitude of their revisions.
Compared with those in the IMF's January update, the UK inflation forecast has been revised upward by 0.7 percentage points.
Conversely, global growth is expected to drop from an estimated 1.8% in 2024 to 1.4% in 2025 and 1.5% in 2026. The forecasts for 2025 include significant downward revisions for the United Kingdom with the growth projection for 2025 now 1.1%, 0.5 percentage points lower compared to the forecast in January.
This reflects a smaller carryover from 2024, the impact of recent tariff announcements, an increase in gilt yields, and weaker private consumption amid higher inflation as a result of regulated prices and energy costs.
In its report, the IMF said: "After enduring a prolonged and unprecedented series of shocks, the global economy appeared to have stabilized, with steady yet underwhelming growth rates. However, the landscape has changed as governments around the world reorder policy priorities and uncertainties have climbed to new highs. Forecasts for global growth have been revised markedly down compared with the January 2025 World Economic Outlook (WEO) Update, reflecting effective tariff rates to levels not seen in a century and a highly unpredictable environment. Global headline inflation is expected to decline at a slightly slower pace than what was expected in January.
"Intensifying downside risks dominate the outlook, amid escalating trade tensions and financial market adjustments. Divergent and swiftly changing policy positions or deteriorating sentiment could lead to even tighter global financial conditions. Ratcheting up a trade war and heightened trade policy uncertainty may further hinder both short-term and long-term growth prospects. Scaling back international cooperation could jeopardize progress toward a more resilient global economy."
