IMF Raises 2025 Global Growth Forecast to 3.2%

On October 14, the International Monetary Fund (IMF) raised its 2025 global economic growth outlook to 3.2%, up 0.2 percentage points from its previous July forecast. This reflects progress in tariff negotiations between the United States and major countries and regions. While the IMF anticipates avoiding a sharp decline, it has also raised the risk of a “collapse of the artificial intelligence (AI) boom.”

The IMF reassesses its economic outlook quarterly. The April outlook, following the US announcement of reciprocal tariffs, lowered the 2025 growth rate by 0.5 percentage points. However, subsequent upward revisions in July and October resulted in a combined recovery of 0.4 percentage points.

The 3.2% growth forecast for 2025 remains unchanged from the October 2024 outlook, before the US election. The current forecast for 2026 is 3.1%, unchanged from July. While avoiding a sharp decline, the IMF anticipates a gradual deceleration from 2024, when it reached 3.3%.

The US economic growth rate for 2025 increased by 0.1 percentage point to 2.0%, while the Eurozone’s also increased by 0.2 percentage points to 1.2%. The EU and Japan reached an agreement with the US on tariff negotiations after July. The passage of the “Big, American” bill and the Federal Reserve’s (FRB) interest rate cuts will also provide tailwinds for the US economy.

Japan’s outlook was raised by 0.4 percentage points from its July outlook to 1.1%. The IMF explained that this larger upward revision than for other countries and regions was due to rising real wages supporting personal consumption. However, Japan’s economic growth rate is expected to slow to 0.6% in 2026 as external demand slows.

China’s growth rate remained unchanged from its previous forecast of 5.0% in 2024, falling to 4.8% in 2025 and 4.2% in 2026. US President Trump has threatened to impose a 100% tariff on China’s rare earth exports, but this is not reflected in this outlook.

Regarding future downside risks, in addition to tariff policies, the IMF also explicitly identified the possibility of a “collapse of the AI ​​boom.” The IMF believes that “overly optimistic growth forecasts for AI may be revised, triggering market adjustments.”

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