IMF downgrades global GDP growth forecast for 2025 to 2.8%, confirms 2% for Ukraine

Global GDP growth will slow from 3.3% in 2024 to 2.8% in 2025 and 3% in 2026, the International Monetary Fund (IMF) published an updated World Economic Outlook (WEO) on Tuesday.

According to the baseline forecast, which includes information as of April 4, global growth will decline to 2.8% in 2025 and 3% in 2026 - compared to 3.3% for both years in the January 2025 WEO, which corresponds to a cumulative deterioration in the forecast by 0.8 percentage points (p.p.) and is well below the historical average (2000-2019) of 3.7%, the publication says.

It notes that the situation has changed as governments around the world are shifting their policy priorities. Among other things, since the January 2025 WEO, a number of new tariff measures have been announced and implemented by the United States and countermeasures by its trading partners.

This led to the introduction of almost universal US tariffs on April 2 and to effective tariff rates reaching levels not seen in the last century, the IMF said, adding that this in itself is a major negative shock to growth.

The unpredictability with which these measures are unfolding is also weighing on economic activity and prospects, while making it more difficult than usual to formulate assumptions that could form the basis for an internally consistent and timely set of forecasts, the fund said.

The baseline forecast projects growth in advanced economies at 1.4% in 2025. Growth in the United States is expected to slow to 1.8%, a 0.9 percentage point below the forecast published in the January 2025 WEO, due to greater political uncertainty, trade tensions and weaker demand momentum, while growth in the European area at 0.8% is expected to slow by 0.2 p.p.

In emerging market and developing economies, growth will slow to 3.7% in 2025 and 3.9% in 2026, with significant downward revisions for countries most affected by recent trade measures, such as China.

For Ukraine, the GDP growth forecast for this year is maintained at 2% and for next year at 4.5%.

The IMF expects global underlying inflation to decline somewhat more slowly than expected in January, reaching 4.3% in 2025 and 3.6% in 2026, with a notable upward revision for advanced economies and a slight downward revision for emerging markets and developing economies in 2025.

For Ukraine, average annual inflation is forecast at 12.6% this year and 7.7% next year, compared with 6.5% last year.