IMF cuts growth forecasts by 0.5%

It has also downgraded its 2025 growth projections for the United States by nearly one percentage point and revised down its outlook for all other G7 countries. Major economies including China, India, Brazil, and South Africa have also seen their forecasts reduced.

Among the G20 nations, only Turkey, Argentina, and Russia have received growth upgrades.

The UK is now expected to grow by 1.1% – down from the 1.6% forecast made in January. In response, Chancellor Rachel Reeves acknowledged the downgrade but highlighted that the IMF still expects the UK to be the “fastest-growing European economy” in 2025. She added: “The report also clearly shows that the world has changed.”

Despite the downgrades, the IMF’s Chief Economist, Pierre-Olivier Gourinchas, said the central forecast remains that global economies will avoid recession this year. However, he noted that the probability of a recession in the US has risen to nearly 40%.

He warned: “The major risk in front of us is that there could be further escalation in tariffs and trade tensions. There is also the risk of financial conditions tightening much further than they have.”

The forecast accounts for US tariff announcements and retaliatory measures introduced by other countries between 1 February and 4 April.