IMF Raises Global Growth Forecast Amid Weaker Dollar, Easing Trade Barriers

The International Monetary Fund (IMF) has upgraded its global economic growth outlook for 2025 and 2026, citing supportive fiscal policies, easing trade restrictions, and a weaker U.S. dollar that is boosting global demand.

In its July 2025 World Economic Outlook update, the IMF now forecasts global GDP growth at 3.0% in 2025 and 3.1% in 2026, up from its April projections of 2.8% and 3.0%, respectively.

The improved forecast reflects stronger-than-expected economic activity driven by:

• Accelerated growth ahead of anticipated tariff increases
• Looser trade conditions
• Expansionary fiscal measures in key economies

Although global inflation is expected to ease, the Fund warned that inflation in the United States may remain above target, potentially delaying interest rate normalization and creating uncertainty in global financial markets.

“Global headline inflation is projected to decline to 4.2% in 2025 and 3.6% in 2026,” the report noted. However, it emphasized that this average masks significant differences across countries, with inflation expected to stay elevated in the U.S. while remaining lower in other major economies.

Despite the upward revision, the IMF cautioned that risks remain skewed to the downside, pointing to rising geopolitical tensions, uncertainty around trade policy, and fragile investor sentiment as potential obstacles to sustained growth.

To mitigate these risks, the IMF urged global policymakers to:

• Rebuild fiscal buffers
• Reinforce macroeconomic stability
• Establish predictable investment environments
• Pursue structural reforms to bolster long-term resilience

The Fund added that global growth could receive a further boost if trade negotiations result in reduced tariffs and greater economic cooperation.

“Policies must focus on restoring confidence, maintaining financial and price stability, and laying a foundation for sustainable growth,” the IMF concluded.