The International Monetary Fund (IMF) has warned that the global economy is gradually losing momentum as nations adjust to new waves of trade tariffs, fiscal tightening, and policy realignments.
In its latest World Economic Outlook, released on Tuesday, October 14, 2025, the Fund projected that global growth will slow from 3.3% in 2024 to 3.2% in 2025, and further to 3.1% in 2026 — despite a modest upward revision from its April forecast.
According to the IMF, the world economy is navigating a “delicate transition” as temporary supports fade and protectionist measures reshape trade patterns.
“The global landscape has been reshaped by new policy measures, with some of the harsher tariff impacts blunted by fresh trade deals and temporary boosts in early 2025. But those supports—such as firms front-loading exports ahead of new levies—are now fading,” the report stated.
Advanced economies are projected to grow by around 1.5%, while emerging markets and developing economies are expected to expand slightly above 4%, buoyed by strong domestic demand in Asia and parts of Latin America.
Inflation is anticipated to continue easing globally but will remain above target levels in the United States and relatively subdued in other regions.
The Fund cautioned that risks are still tilted to the downside, pointing to persistent policy uncertainty, rising protectionism, and potential labour market disruptions as key threats. It also highlighted concerns about fiscal fragility and the possibility of market corrections.
The IMF urged governments to adopt prudent fiscal management and maintain sound monetary policies.
“Policymakers should focus on rebuilding fiscal buffers, preserving central bank independence, and implementing structural reforms to restore business confidence and sustain medium-term growth momentum,” the report advised.
The latest outlook underscores the IMF’s growing concern that without coordinated policy efforts, the global recovery could stall amid shifting trade alliances and renewed economic fragmentation.
