The International Monetary Fund has slashed its 2025 outlook for global growth

The International Monetary Fund (IMF) has cut its global growth forecast, saying that the global economic system is undergoing a fundamental transformation amid mounting uncertainty over US trade policy.

Since returning to office in January, US President Donald Trump has imposed sweeping trade restrictions, culminating in what he calls 'Liberation Day' tariffs introduced on April 2.

The tariffs have been raised to levels not seen since the Great Depression, the IMF said on Tuesday in releasing its latest World Economic Outlook. The report projects that global output will slow to 2.8% this year, down from 3.3% in 2024. As recently as in January, the IMF had forecast growth would hold steady in 2025.

"The global economic system under which most countries have operated for the last 80 years is being reset, ushering the world into a new era," IMF chief economist Pierre-Olivier Gourinchas said.

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He explained that existing rules are being challenged, while new ones have yet to take shape. The sudden tariff hikes and broader policy uncertainty could significantly slow global growth, Gourinchas said.

The IMF lowered its forecast for US economic output to 1.8% in 2025, down from 2.8% last year, and projected further cooling in 2026.

Top US trading partners Mexico, Canada, and China are all expected to take a hit, it said. China's growth is projected to slow to 4% this year due to attempts to counter the effects of Washington's tariffs. The IMF also expects most EU economies to face slower growth as a result.

Trump has imposed a blanket 10% tariff on nearly all imports, alongside duties of at least 145% on Chinese goods entering the US. He has also introduced "reciprocal" tariffs on major trading partners, citing alleged unfair trade practices. He later paused the duties until July as the administration pursues bilateral trade deals, but has warned the tariffs could rise again if other countries retaliate. The trade tensions and policy uncertainty have rattled global markets.

(RT.com)