## EXECUTIVE SUMMARY

## Source details

**Canonical URL:** [EXECUTIVE SUMMARY](https://www.imf.org/-/media/files/publications/weo/2025/april/english/execsum.pdf)

## Other formats

- [Markdown version](/-/media/files/publications/weo/2025/april/english/execsum.pdf.md)
- [Structured JSON version](/-/media/files/publications/weo/2025/april/english/execsum.pdf.json)

---

### Overview
- Following an unprecedented series of shocks in the preceding years, global growth was stable yet underwhelming through 2024 and was projected to remain so in the January 2025 World Economic Outlook (WEO) Update.
- Since the January 2025 WEO Update, a series of new tariff measures by the United States and countermeasures by its trading partners were announced and implemented, ending up in near-universal US tariffs on April 2 and bringing effective tariff rates to levels not seen in a century.
- Because of the complexity and fluidity of events, the report presents a “reference forecast” based on information available as of April 4, 2025 (including the April 2 tariffs and initial responses), complemented with a range of global growth forecasts under different trade policy assumptions.

### Reference forecast and growth projections
- Global growth is projected to drop to 2.8 percent in 2025 and 3 percent in 2026 in the reference forecast—down from 3.3 percent for both years in the January 2025 WEO Update, corresponding to a cumulative down-grade of 0.8 percentage point, and much below the historical (2000–19) average of 3.7 percent.
- Advanced economies:
  - Growth is projected at 1.4 percent in 2025.
  - United States growth is expected to slow to 1.8 percent in 2025, a pace that is 0.9 percentage point lower relative to the projection in the January 2025 WEO Update, on account of greater policy uncertainty, trade tensions, and softer demand momentum.
  - Euro area growth is expected at 0.8 percent in 2025, a slowdown of 0.2 percentage point relative to January projections.
- Emerging market and developing economies (EMDEs):
  - Growth is expected to slow to 3.7 percent in 2025 and 3.9 percent in 2026, with significant downgrades for countries affected most by recent trade measures, such as China.

### Inflation outlook
- Global headline inflation is expected to decline at a pace that is slightly slower than expected in January, reaching 4.3 percent in 2025 and 3.6 percent in 2026.
- The 2025 revisions include notable upward revisions for advanced economies and slight downward revisions for emerging market and developing economies.

### Trade measures and tariff specifics (as reported)
- The Jan. 20–Apr. 1 tariffs in 2025 include:
  - 20 percent tariffs on China;
  - 25 percent tariffs on steel and aluminum;
  - 25 percent tariffs on Mexico and Canada;
  - 10 percent tariff on Canadian energy imports.
- A United States–Mexico–Canada Agreement (USMCA) carve-out is assumed to halve the effective tariff increase for Canada and Mexico.
- The April 2 tariffs include auto sector tariffs and country-specific tariffs, applying exemptions provided in Annex II of the Executive Order per IMF staff judgment.
- The April 9 tariffs include an increase in the tariffs on China to 145 percent and a reduction in other country-specific tariffs to 10 percent. It also includes exemptions on some electronic products announced on April 11.

### Risks and potential impacts
- Intensifying downside risks dominate the outlook:
  - Ratcheting up a trade war, along with even more elevated trade policy uncertainty, could further reduce near- and long-term growth.
  - Eroded policy buffers weaken resilience to future shocks.
  - Divergent and rapidly shifting policy stances or deteriorating sentiment could trigger additional repricing of assets beyond what took place after the announcement of sweeping US tariffs on April 2 and sharp adjustments in foreign exchange rates and capital flows, especially for economies already facing debt distress.
  - Broader financial instability may ensue, including damage to the international monetary system.
  - Demographic shifts and a shrinking foreign labor force may curb potential growth and threaten fiscal sustainability.
  - Lingering effects of the recent cost-of-living crisis, coupled with depleted policy space and dim medium-term growth prospects, could reignite social unrest.
  - The resilience shown by many large emerging market economies may be tested as servicing high debt levels becomes more challenging in unfavorable global financial conditions.
  - More limited international development assistance may increase pressure on low-income countries, pushing them deeper into debt or necessitating significant fiscal adjustments.

### Policy recommendations and priorities
- Restore clarity and coordination in global policy:
  - Work constructively to promote a stable and predictable trade environment, facilitate debt restructuring, and address shared challenges.
  - Address domestic policy and structural imbalances to ensure internal economic stability, rebalance growth-inflation trade-offs, rebuild buffers, and reinvigorate medium-term growth prospects.
- Monetary and financial stability:
  - Priority for central banks is fine-tuning monetary policy stances to achieve mandates and ensure price and financial stability amid more difficult trade-offs.
  - Mitigating disruptive foreign exchange volatility may require targeted interventions, as outlined in the IMF’s Integrated Policy Framework.
  - Activate macroprudential tools as needed to contain buildup of vulnerabilities and provide support in case of stress events.
- Fiscal and structural policy:
  - Restore fiscal space and put public debt on a sustainable path while meeting critical spending needs to ensure national and economic security.
  - Implement credible medium-term fiscal consolidation plans.
  - Pursue structural reforms in labor, product, and financial markets to reduce debt, narrow cross-country disparities, and support medium-term growth.
- Migration and demographic considerations:
  - Chapter 2 and Chapter 3 note that evolving age structures and migration policy shifts have sizable spillover effects and important consequences for medium-term growth and external imbalances.

*Source: Executive Summary, World Economic Outlook: A Critical Juncture Amid Policy Shifts (information available as of April 4, 2025).*

---


_Source: https://www.imf.org/-/media/files/publications/weo/2025/april/english/execsum.pdf_