The uncertain and complex situation following the Trump administration's tariff shock means that the International Monetary Fund (IMF) is not issuing a traditional forecast in the spring edition of the World Economic Outlook.
"Existing rules are being challenged and new rules have not yet been formulated," writes IMF's chief economist Pierre-Olivier Gourinchas in a blog post where he presents the report's main points.
Global growth falls
Instead, IMF economists are presenting a so-called reference forecast, based on which they outline possible scenarios.
The reference forecast describes a future where global growth falls to 2.8 percent this year and 3.0 percent in 2026. It is based on the information available as of April 4 this year.
It is not a global recession. But it can be compared to 3.3 percent in global growth last year and IMF economists' January forecast of 3.3 percent in global growth for 2025-2026. The historical average for global growth is 3.9 percent, according to the IMF.
According to Gourinchas, the growth forecast would only have been reduced to 3.2 percent if US President Donald Trump had refrained from the tariff shock on April 2 - which has resulted in new US tariffs on around 180 countries and a full-scale trade war between the US and China with tariffs of 145 and 125 percent on each other.
Highest tariffs in over 100 years
The outlook has deteriorated rapidly for almost all countries. And the IMF warns that there is a high risk of a much worse development than the reference forecast. They are also raising warning flags for new major falls in the value of various types of assets, currencies, and dramatic capital flows.
The tariffs that have now been introduced are described as the highest in over 100 years by the IMF's economists. But if they were to be reduced or removed - perhaps replaced by new trade agreements - the scenario could change rapidly for the better, adds Gourinchas.
The report is being presented in connection with the IMF's spring meeting in Washington, USA, which takes place this week.
The IMF's reference forecast for global growth in 2025 and 2026 is 2.8 and 3.0 percent, respectively. This can be compared to the IMF forecast of 3.3 percent in global growth for the two years as recently as in January.
IMF economists expect a growth in world trade of 1.7 and 2.5 percent during the two years, down from 3.2 and 3.3 percent in January. And the forecast for global inflation is being raised by 0.1 percentage points for the two years to 4.3 and 3.6 percent.
For the world's largest economy, the USA, the reference forecast for 2025 and 2026 points to a growth of 1.8 and 1.7 percent. In January, the IMF's USA forecast for those years was 2.7 and 2.1 percent.
For the number two in the world, China, the reference forecast for the two years is 4.0 percent, compared to previously 4.6 and 4.5 percent.
The eurozone is expected to grow by 0.8 and 1.2 percent in 2025 and 2026, respectively, according to the reference forecast. The forecast was 1.0 and 1.4 percent in January.
Source: IMF, World Economic Outlook, April 2025
