In its World Economic Outlook Update, IMF said: “The unpredictability with which these measures have been unfolding also has a negative impact on economic activity and the outlook and, at the same time, makes it more difficult than usual to make assumptions that would constitute a basis for an internally consistent and timely set of projections.” Given the complexity and fluidity of the tariff/trade situation, IMF issued a “reference forecast” based on information available as of April 4.
The swift escalation of trade tensions and extremely high levels of policy uncertainty are expected to have a significant impact on global economic activity. IMF now forecasts global economic growth will decline to 2.8% this year and 3% in 2026, down from the projections of 3.3% for both years in January.
IMF forecasts economic growth in advanced economies to be 1.4% this year. Growth in the U.S. is expected to slow to 1.8%, down 0.9 percentage point from the January outlook, due to greater policy uncertainty, trade tensions and softer demand momentum. Economic growth is forecast to rise 0.8% in the euro area, 0.6% in Japan, 1.1% in the United Kingdom, 1.4% in Canada and 1.8% in “other advanced economies.” For 2026, IMF projects growth of 1.5% for advanced economies, with U.S. GDP expected to slow to 1.7%.
In emerging market and developing economies, growth is expected to slow to 3.7% this year and 3.9% in 2026, with significant downgrades for countries affected most by recent trade measures, such as China. IMF forecasts China’s GDP at 4% in both 2025 and 2026, down from 5% growth last year. India’s growth is projected to slow to 6.2% this year and increase to 6.3% in 2026.
