IMF cuts US growth forecast for 2025
The International Monetary Fund (IMF) has revised its 2025 global growth forecast downward, citing rising trade tensions and the economic fallout from newly imposed tariffs by the United States.
President Donald Trump’s April 2 rollout of “reciprocal” tariffs has not only shaken stocks – the S&P 500 is down 9% since the levies were launched – but they also have set off countermeasures from other trading partners, News.Az reports, citing CNBC.
“This on its own is a major negative shock to growth,” the IMF said in the executive summary of its April 2025 World Economic Outlook.
This new outlook includes a “reference forecast” for global economic growth and inflation, based on data available as of April 4 — including the “reciprocal” tariffs but excluding subsequent developments like the 90-day pause on higher rates and the exemption on smartphones — and updates the earlier outlook the IMF shared in January.
In its new projections, the IMF now calls for a U.S. growth outlook of 1.8% in 2025, down 0.9 percentage point from its January forecast.
While it is not yet calling for a recession in the U.S., chief economist Pierre-Olivier Gourinchas told reporters Tuesday that the IMF now views recession odds at 40%, up from 25% in October 2024.
The IMF also cut back its global growth forecast to 2.8% in 2025, down 0.5 percentage point from its previous estimate.
“The April 2 Rose Garden announcement forced us to jettison our projections — nearly finalized at that point — and compress a production cycle that usually takes more than two months into less than 10 days,” chief economist Pierre-Olivier Gourinchas wrote in the April report.
“The common denominator ... is that tariffs are a negative supply shock for the economy imposing them,” he said.
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