The IMF anticipates a slowdown in global growth despite unexpected resilience

A Mixed Revision of Global Outlook

The new IMF projections come amid persistent uncertainty surrounding US trade policies. The Washington-based institution notes that global growth is expected to be around 1.5% in advanced economies and just over 4% in emerging and developing countries for the 2025-2026 period. However, these figures mask significant regional disparities.

The United States is expected to experience a notable slowdown, with growth reduced to 2% in 2025 compared to 2.8% in 2024, while the eurozone is projected to see an increase of 1.2% in 2025 according to consolidated estimates. China's economy, still dependent on exports and structural imbalances, is expected to slow to 4% growth in 2025. Conversely, India is anticipated to maintain a more favorable momentum with a growth rate of 6.6% for the 2025-2026 fiscal year, benefiting from strong domestic consumption and robust internal demand. Meanwhile, global trade is projected to grow by only 2.9% on average over 2025-2026, well below the 3.5% recorded in 2024, reflecting the ongoing fragmentation of international exchanges. This deceleration occurs despite a catch-up effect related to anticipated imports in the first half of 2025.

Resilience Factors in the Face of Market Turbulence

The relative resilience of the global economy can be attributed to several factors identified by Pierre-Olivier Gourinchas, the IMF's chief economist. Currently, the effective US tariff rates average 17.5%, lower than the initially announced 23% in April. The private sector has shown remarkable adaptability by accelerating shipments to the United States before the new tariff barriers were implemented, a phenomenon particularly noticeable in emerging countries.

Financial conditions have been more favorable than expected, primarily due to the dollar's depreciation in the first half of the year, which has eased the debt burden on developing economies. Several major economies have also implemented fiscal stimulus policies, with China and the Eurozone leading the way, thereby supporting activity despite headwinds. Germany, in particular, is planning a budget expansion expected to bolster Eurozone growth in 2026. Massive investments in artificial intelligence have also provided support, although the IMF warns of a potential sharp reevaluation of tech valuations if the expected productivity gains disappoint. These various factors explain why the impact of US protectionist measures has been, so far, more contained than anticipated.

Persistent Risks Clouding the Horizon

Despite this relative resilience, the outlook remains fragile, with risks skewed to the downside according to the IMF. Prolonged uncertainty regarding trade policies is already affecting corporate investment decisions. The institution notes that excluding the tech sector, global investments are actually declining compared to 2024.

Trade tensions could intensify, with risks of new tariff increases or retaliatory measures that have so far only been partially implemented. More restrictive immigration policies in the United States present another negative supply shock, reducing the availability of foreign labor amid an aging population. Fiscally, global public debt is expected to approach 100% of GDP by the end of the decade, with more than a third of countries seeing their debt levels rise in 2025. This situation limits governments' room to maneuver in response to new shocks.

While inflation is generally expected to retreat, it will remain above the 2% target in the United States, with upward risks tied to the gradual passing of tariffs onto consumer prices. For emerging and developing countries, the contraction of international public aid and high borrowing costs are constraining external financing, while in many low-income countries, interest payments consume about 15% of budget revenues.