The International Monetary Fund (IMF) has slashed the global growth forecast for this year and the next, downgrading the outlook for almost all countries in its latest World Economic Outlook (WEO) report for April amid the ongoing tariff war.

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The IMF said in its report that the escalation of trade tensions and uncertainty are likely to impact global economic activity significantly.
Under the ‘reference forecast’ as of April 4, IMF has projected global growth to fall to 2.8% in 2025 and 3% in 2026—down from 3.3% for both years in the January 2025 WEO Update, with downward revisions for nearly all countries, the report said.

The post-April 9 model-based forecast incorporates the tariff hikes after April 4 and estimates that global growth in 2025 would be about 2.8% and about 2.9% in 2026. 

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“Unlike in the previous century, the global economy is now characterised by a high degree of economic and financial integration, with supply chains and financial flows crisscrossing the world, whose potential unwinding could constitute a major source of economic upheaval. For this reason, we expect that the sharp increase on April 2 in both tariffs and uncertainty will lead to a significant slowdown in global growth in the near term,” said Pierre-Olivier Gourinchas, Economic Counsellor at the IMF.

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IMF pares down India growth figures

IMF has also cut India’s FY26 and FY27 forecasts by 30 basis points (bps) and 20 bps respectively citing trade tensions and global uncertainty. It sees the Indian economy growing at 6.2% in FY26, and 6.3% in FY27. 
The growth outlook for India is relatively more stable at 6.2% in FY26 as it is supported by private consumption, particularly in rural areas, the IMF report says.

Global outlook, risks and policy priorities

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The report says that growth in advanced economies is projected to be 1.4% in 2025. Growth in the US is expected to drop to 1.8%, that is 0.9% lower than projected in the January 2025 WEO update. Growth in the euro area is expected to slow by 0.2 percentage points to 0.8%, the report said.

In emerging markets and developing economies, growth is expected to slow down to 3.7% in 2025 and 3.9% in 2026, with significant downgrades for countries affected most by recent trade measures, like China.

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“The situation remains fluid and risks remain firmly tilted to the downside. The global economy showed surprising resilience during the severe shocks of the past four years and still bears significant scars. It is now being severely tested once again, especially in emerging market and developing economies with more limited buffers,” he added.

Ratcheting up a trade war, along with even more elevated trade policy uncertainty, could further reduce near- and long-term growth, while eroded policy buffers weaken resilience to future shocks, the report pointed.

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Divergent and rapidly shifting policy stances or deteriorating sentiment could trigger additional repricing of assets beyond what took place after the announcement of sweeping US tariffs on April 2 and sharp adjustments in foreign exchange rates and capital flows, especially for economies already facing debt distress.

On the upside, a de-escalation from current tariff rates and new trade agreements providing clarity and stability in policies could lift global growth, the report said.