IMF Cuts 2025 Growth Forecasts for Emerging Economies, Global Outlook Dims

The International Monetary Fund (IMF) has sharply cut its 2025 global economic growth forecast, citing escalating trade tensions, especially between the US and China, as well as tighter financial conditions and increased policy uncertainty. US tariffs and retaliatory measures have contributed to lower GDP projections for major economies: US growth is now forecast at 1.8%, China at 4.0%, and Mexico is expected to contract, making it the only major economy with a negative outlook. The IMF also downgraded growth estimates for emerging markets, the UK, and Saudi Arabia, with specific concerns over higher borrowing costs, energy prices, and weaker consumption dampening prospects. The Fund highlighted that many developing nations face reduced fiscal space and greater debt servicing burdens, while oil-dependent economies must contend with low crude prices and slower production rebounds. Despite these challenges, some Gulf oil exporters remain relatively resilient due to diversification and stronger financial reserves. Overall, risks to the global outlook remain tilted to the downside, with ongoing trade disputes and geopolitical uncertainties weighing on recovery prospects.