The International Monetary Fund (IMF) has revised its global growth forecasts downward. It projected a growth rate of 2.8% for 2025 and 3% for 2026, down from its previous estimate of 3.3% for both years issued in January. These revisions reflect increasing global uncertainty, fueled by rising trade tensions and shifts in economic policy across major economies.
Despite the broader slowdown, the IMF maintained its strong outlook for the UAE, forecasting a growth rate of 4% in 2025 and an expected increase to 5% in 2026. This places the UAE among the world’s top-performing economies, alongside China and India. The IMF also lowered China’s growth forecast from 4.6% to 4%. As for India, which leads globally with an expected growth of 6.2%, the IMF revised its growth forecast down from 6.5%.
The IMF’s report highlights that global inflation will likely decline more slowly than previously anticipated due to the influence of rising tariffs. Expectations indicate that inflation will reach 4.3% in 2025 and 3.6% in 2026, with notable upward adjustments for advanced economies, including the United States.
The report is described as a baseline scenario, informed by developments up to April 4, and underscores the current volatility and complexity in the global economic environment.
The IMF issued these forecasts shortly after U.S. President Donald Trump announced sweeping tariffs targeting nearly all major trade partners. The IMF’s Chief Economist, Pierre-Olivier Gourinchas, described this moment as the beginning of a new era in which the global economic system established over the past eight decades is undergoing a reset.
He warned that rising trade tensions and extreme policy uncertainty could have a significant negative impact on global economic activity. Gourinchas noted that the effects are already evident in slowing growth across the United States, the eurozone, China, and beyond.
The IMF cuts its U.S. growth forecast for 2025 to 1.8%, down from 2.8% in 2024, and now expects 1.7% growth in 2026. Inflation is projected to rise to 3% in 2025, a full percentage point higher than the previous forecast, driven by tariffs and sustained strength in the services sector.
Gourinchas emphasized the need for the U.S. Federal Reserve to remain highly vigilant in anchoring inflation expectations. He noted that many households still suffer from the lingering effects of pandemic-era inflation. When asked about the potential political implications of dismissing Fed Chair Jerome Powell, he stressed the critical importance of preserving central bank independence to maintain credibility in managing inflation.
Elsewhere, growth forecasts were revised downward across North America and Europe. Canada’s expected growth was reduced to 1.4% in 2025 and 1.6% in 2026. Mexico’s economy is projected to shrink by 0.3% in 2025 due to the new tariffs, before recovering to 1.4% the following year.
In Europe, eurozone growth is forecasted at 0.8% in 2025 and 1.2% in 2026, with Spain as an exception, expected to grow by 2.5%.
Germany’s outlook was lowered to zero growth in 2025, reflecting continued fiscal constraints. The UK is expected to grow by 1.1% in 2025 and 1.4% in 2026, affected by new trade barriers, higher bond yields, and weak consumer spending. Japan’s economy is projected to grow only 0.6% in 2025.
China’s growth was revised down to 4% for both 2025 and 2026, with Gourinchas noting that the impact of U.S. tariffs—estimated at 1.3 percentage points—was partially offset by stronger domestic fiscal support.
In the Gulf region, the UAE continues to lead with the strongest projected growth, while the IMF maintains a positive outlook for the region overall. Saudi Arabia is expected to grow by 3% in 2025 and 3.7% in 2026. Kuwait is projected to grow by 1.9% in 2025 and 3.1% in 2026.
Qatar’s economy is forecast to expand by 2.4% in 2025 and surge to 5.6% in 2026. Bahrain’s growth is expected to reach 2.8% in 2025 and 3% in 2026, while Oman is projected to maintain steady growth of 2.3% in both years.
The IMF concluded that medium-term global growth prospects remain subdued, with the five-year average settling at 3.2%, below the historical average of 3.7% recorded between 2000 and 2019. Without major structural reforms, the Fund does not foresee a significant improvement in these trends.
Additionally, global trade growth was downgraded to 1.7% for 2025, signaling increased fragmentation of the global economy and a reduction in efficiency across supply chains.