FAMAGUSTA GAZETTE – The International Monetary Fund on Tuesday downgraded its global growth projection for 2025 to 2.8%, a sharp 0.5 percentage point drop from its January estimate, citing economic uncertainty fueled by escalating trade tensions.
The latest World Economic Outlook warns that a wave of tariff measures announced by the United States and counteractions by trade partners have pushed effective U.S. tariff rates to levels unseen in a century.
The IMF described the tariffs as a “major negative shock” and cautioned that the unpredictability surrounding them could weaken global economic activity.
“The global economic system under which most countries have operated for the last 80 years is being reset,” IMF Chief Economist Pierre-Olivier Gourinchas said at a press conference, adding that existing trade rules are being challenged while new ones remain unclear.
Under its revised forecast, global growth is expected to dip to 2.8% in 2025 and 3% in 2026, well below the historical average of 3.7% from 2000-2019.
The United States is projected to see slower growth at 1.8%, nearly a full percentage point below the January forecast, amid policy uncertainty and weakened demand. Eurozone growth is expected to drop to 0.8%.
Advanced economies overall are projected to expand by 1.4% in 2025, while growth in emerging markets is set to decline to 3.7%.
The IMF warned that deepening trade conflicts and rising policy uncertainty could further drag global growth, strain financial systems, and disrupt currency markets. Gourinchas urged policymakers to stabilize trade policies and foster international cooperation.
“The global economy needs a clear and predictable trading system,” he said, emphasizing the need for mutually beneficial agreements and reforms in international trade rules.