1

CHAPTER

GLOBAL PROSPECTS AND POLICIES

Policy Uncertainty Tests Global Resilience of the year but has recently shifted to a notably more
pessimistic stance as uncertainty has taken hold and
The global economy is at a critical juncture. Signs
new tariffs have been announced. In labor markets,
of stabilization were emerging through much of 2024,
hiring has slowed in many countries, and layoffs have
after a prolonged and challenging period of unprec-
risen. Meanwhile, progress on disinflation has mostly
edented shocks. Inflation, down from multidecade
stalled, and inflation has edged upward in some cases,
highs, followed a gradual though bumpy decline
with an increasing number of countries exceeding
toward central bank targets (Figure 1.1). Labor markets
their inflation targets. Services inflation, though still
normalized, with unemployment and vacancy rates
on a downward trend, remains above levels prior to
returning to prepandemic levels (Figure 1.2). Growth
the inflation surge, and core goods inflation has seen
hovered around 3 percent in the past few years, and
an uptick since November 2024. Trade has held up,
global output came close to potential (Figure 1.3).
but this is mostly because of an increase in Chinese
However, major policy shifts are resetting the global
exports and US imports at the end of 2024, with
trade system and giving rise to uncertainty that is
consumers and businesses likely front-loading ahead
once again testing the resilience of the global econ-
of tariffs that were anticipated back then and now are
omy. Since February, the United States has announced
in place.
multiple waves of tariffs against trading partners, some
In the backdrop, domestic imbalances and policy
of which have invoked countermeasures. Markets first
gaps give rise to unbalanced growth while opening up
took the announcements mostly in stride, until the
potential fragilities. In some countries, such as China,
United States’ near-universal application of tariffs on
growth in 2024 has been mainly supported by external
April 2, which triggered historic drops in major equity
demand. On the contrary, in the United States, private
indices and spikes in bond yields, followed by a partial
consumption—traditionally the major contributor
recovery after the pause and additional carve-outs
to GDP growth—as a share of GDP has reached its
announced on and after April 9. Despite significant
highest point during the 2020s, and the fiscal deficit
equity market corrections in early March and April,
remains historically large. Within-country inequalities
price-to-earnings ratios in the United States remain at
in households’ income gains signal another potential
elevated levels in historical context, raising concerns
vulnerability. In some cases, real GDP has recovered,
about the potential for further disorderly corrections
but real GDP per capita has not (Figure 1.5, panel 1).
(April 2025 Global Financial Stability Report [GFSR]).
In others, median income has fallen behind, whereas
Uncertainty, especially that regarding trade policy,
incomes at the top and bottom of the distribution have
has surged to unprecedented levels (Figure 1.4). The
recovered. Meanwhile, salient indicators of the cost of
degree of the surge varies across countries, depending
living, such as house prices and rents, have increased
on exposures to protectionist measures through trade
substantially (Figure 1.5, panel 2).
and financial linkages as well as broader geopolitical
relationships.
These developments come against an already-cool-
ing economic momentum. Recent data on real Varying Momentum across Countries
activity have been disappointing, with GDP growth The stable performance of the global economy in
in the fourth quarter of 2024 trailing the forecasts in the past couple of years hides important differences
the January 2025 World Economic Outlook (WEO) across countries. These differences are the result of
Update. High-frequency indicators such as retail sales diverse shocks, structural characteristics, and policy
and purchasing managers’ surveys point to slowing actions. They manifest themselves in varying cycli-
growth. In the United States, consumer, business, and cal positions and structural forces determining the
investor sentiment was optimistic at the beginning outlook.

International Monetary Fund | April 2025 1

 WORLD ECONOMIC OUTLOOK: A Critical Juncture amid Polic y Shifts

Figure 1.1. Global Inflation Trends Figure 1.2. Labor Markets

(Percent, year over year) (Percent)

World US China 14 1. Unemployment Rates

Other AEs Other EMDEs
12 Latest
12 1. Headline Inflation Lowest point
10
End of 2019
10 8
8 6
6 4
4 2
2 0
AUS CAN EA JPN KOR GBR USA BRA HUN IND MEX POL TUR
0
−2 2.0 2. Vacancy-to-Unemployment Ratios
Jan. Jan. Jan. Jan. Jan. Jan. Jan. Mar.
2018 19 20 21 22 23 24 25 Latest
1.5 Peak
12 2. Core Inflation End of 2019

10 1.0
8
0.5
6
4
0
2 AUS CAN GBR USA Europe

0
Sources: Haver Analytics; India Ministry of Statistics and Programme Implementation,
−2 Periodic Labour Force Survey; International Labour Organization; Organisation for
Jan. Jan. Jan. Jan. Jan. Jan. Jan. Mar. Economic Co-operation and Development; US Bureau of Economic Analysis; US Bureau
2018 19 20 21 22 23 24 25 of Labor Statistics; and IMF staff calculations.
Note: In panel 1, India’s unemployment in urban areas is from Periodic Labour Force
Sources: Haver Analytics; and IMF staff calculations. Survey data. The “lowest point” is from the period spanning March 2019 to the latest
Note: Panels 1 and 2 plot the median of a sample of 57 economies that accounts for available data. In panel 2, “Europe” includes Austria, Belgium, Bulgaria, Croatia,
78 percent of World Economic Outlook world GDP (in weighted purchasing-power-parity Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece,
terms) in 2024. Vertical axes are cut off at –2 percent and 12 percent. The bands depict Hungary, Ireland, Latvia, Lithuania, Luxembourg, Malta, The Netherlands, Poland,
the 25th to 75th percentiles of data across economies. “Core inflation” is the percent Portugal, Romania, the Slovak Republic, Slovenia, Spain, and Sweden. The “peak” is
change in the consumer price index for goods and services, excluding food and energy from the period spanning January 2020 to the latest available data. Data labels in the
(or the closest available measure). AEs = advanced economies; EMDEs = emerging figure use International Organization for Standardization (ISO) country codes. EA =
market and developing economies. euro area.

Cyclical Positions a normalization of private consumption toward more

Most countries are not fully back to their infla- sustainable levels and the negative impact of recur-
tion targets yet, but output gaps are more dispersed ring policy shifts on economic sentiment. This signals
(Figure 1.6, panel 1). In quite a few cases, fiscal policy a deterioration of the cyclical position of the US
remains accommodative even as monetary policy main- economy.
tains a restrictive stance (Figure 1.6, panel 2). The euro area has been in a cyclical rebound, but
The US economy was operating above its poten- domestic demand has been subdued and, with the
tial in 2024, relying heavily on strong domestic exception of Germany, the contribution of consump-
demand. Private consumption grew at an annual rate tion growth may have peaked in its largest economies.
of 2.8 percent in 2024, in excess of its 2.4 percent Weak consumer sentiment and elevated uncertainty
historical (2000–19) average. However, in 2025, signs have raised precautionary saving while weighing down
of a potential reversal have emerged. Consumer spend- consumption growth (October 2024 Regional Economic
ing declined by 0.6 percent in January and remained Outlook: Europe). Manufacturing activity has remained
subdued in February after expanding by 0.6 percent weak on the back of persistently higher energy prices,
in December 2024, with the decrease likely reflecting while services have been the main growth driver,

2 International Monetary Fund | April 2025

 CHAPTER 1 GLOBAL PROSPECTS AND POLICIES

Figure 1.3. Growth Performance and Forecasts Figure 1.5. Income Growth and Cost-of-Living Changes
(Percent)
4 1. Income Growth
12 1. Real GDP Growth (Percent)
World AEs 3 GDP growth GDP per capita growth
10 EMDEs US
Euro area China
8 2

6 1

4
0
2
−1
0

2000–14
15–19
20–24
2000–14
15–19
20–24
2000–14
15–19
20–24
2000–14
15–19
20–24
2000–14
15–19
20–24
2000–14
15–19
20–24
2000–14
15–19
20–24
2000–14
15–19
20–24
2000–14 2015–23 2024–25

1 2. Global Output Gap USA ESP CAN GBR JPN ITA FRA DEU

0 100 2. Cost-of-Living Changes 10

(Percent, relative to 2019:Q4)
−1
80 8
House price appreciation
−2 Change in new mortgage rates (right scale)
60 Change in consumer credit rates (right scale) 6
−3
40 4
−4

−5 20 2
2017 18 19 20 21 22 23 24 25
0 0
Source: IMF staff calculations. USA ESP CAN GBR JPN ITA FRA DEU
Note: AEs = advanced economies; EMDEs = emerging market and developing
economies. Sources: Haver Analytics; Organisation for Economic Co-operation and Development;
and IMF staff calculations.
Note: Data labels in the figure use International Organization for Standardization (ISO)
country codes.

Figure 1.4. Overall Uncertainty, EPU, and TPU

(Index)
contributing to divergence among European countries,
70,000 700 particularly those relying more heavily on these sectors,
WUI
TPU (right scale) notably Germany versus Spain.
60,000 EPU (right scale) 600
For China, prolonged weakness in the real estate
50,000 500 sector and its ramifications, including those for
local government finances, have been key. When the
40,000 400 pandemic seized the Chinese economy, signs of a
downturn in the credit-fueled property market were
30,000 300
gathering. This homegrown vulnerability has depressed
20,000 200 domestic demand, even as policymakers have searched
for measures to tackle property market oversupply and
10,000 100
bolster confidence. Indeed, consumer confidence in
0 0 China, after a decade of moving closely with that in
Jan. Jan. Jan. Jan. Jan. Mar. the rest of the world, plunged in early 2022 and has
2015 17 19 21 23 25
not recovered (Figure 1.7). Rising trade tensions and
Sources: Ahir, Bloom, and Furceri 2022; Caldara and others 2020; Davis 2016; and IMF new tariffs over the past years have also disproportion-
staff calculations. ately affected the Chinese economy. The rebalancing of
Note: The uncertainty measures are news- and media-outlets-based indices that
quantify media attention to global news related to overall uncertainty (WUI), economic
growth drivers from investment and net exports toward
policy uncertainty (EPU), and trade policy uncertainty (TPU). consumption has paused amid continuing deflationary

International Monetary Fund | April 2025 3

 WORLD ECONOMIC OUTLOOK: A Critical Juncture amid Polic y Shifts

Figure 1.6. Cyclical Positions Figure 1.7. Consumer Confidence

(Percent) (Index, OECD harmonized)

4 1. Most Recent Inflation and Output Gap 106

3 Inflation deviation
Output gap 104
2
102
1
100
0
98
−1
US
96 China
−2
POL COL BRA MEX CHL USA IND GBR EA AUS CAN KOR EA
94 ROW
16 2. Monetary-Fiscal Policy Mix
92
RUS Jan. Jan. Jan. Jan. Jan. Jan. Mar.
12 2014 16 18 20 22 24 25
Latest real policy rate

BRA
8 Sources: OECD; and IMF staff calculations.
MEX
IDN Note: The rest of world (ROW) represents the average value for data across 22 countries.
4 ZAF CAN EA = euro area; OECD = Organisation for Economic Co-operation and Development.
USA AUS IND
GBR FRA KOR ITA
0
CHN
DEU JPN of the global economy (April 2024 WEO). Still, there
−4
−4 −2 0 2 4 6 are several cases in which output is still falling behind
Change in fiscal balance, 2022–24 the prepandemic trend.
A big part of the story behind the scarring is the
Sources: Haver Analytics; and IMF staff estimates.
energy shock. European economies, including major
Note: In panel 1, the inflation deviation is defined as the difference between 2025:Q1
inflation and the central bank’s inflation target. The output gap is the 2024 output manufacturing hubs such as Germany and Italy, were
gap. In panel 2, the fiscal balance refers to the general government structural primary particularly exposed to the disruption of natural
balance in percent of potential GDP. The structural primary balance is the cyclically
adjusted balance excluding net interest payments and corrected for a broader range of gas markets following Russia’s invasion of Ukraine
noncyclical factors such as changes in asset and commodity prices. Rolling 12-month (Figure 1.9, panel 1). As oil and natural gas prices
ahead inflation expectations are used for the calculation of the real policy rate. The
sample includes G20 economies excluding Argentina, Saudi Arabia, and Türkiye, owing
soared, countries shifted their energy sources and
to lack of data availability. Data labels in the figure use International Organization for increased efficiency in their energy consumption.
Standardization (ISO) country codes. EA = euro area. There are limits to such strategies, however, because
substitution of energy sources may be difficult, and
pressures and high household saving. Construction and many countries remain dependent on oil and natural
real estate activity remains subdued, whereas industry, gas imports for their energy use (Figure 1.9, panels 2
trade, and transport have been robust. and 3). Crucially, this shock had a twofold effect on
commodity importers as the dollar strengthened,
Structural Forces with the US terms of trade improving amid height-
The varying momentum also owes to the interaction ened uncertainty (External Stability Report 2024).
of cyclical and structural factors. The cross-country Because commodity prices are expressed in dollars,
differences in growth rates would be expected to the stagflationary pressures on commodity import-
narrow as the cyclical forces dissipate but may not ers have become stronger. Similar dynamics apply to
disappear. global food markets, with the effects felt especially in
Compared with the GDP level implied by the low-income countries. By contrast, the United States
prepandemic trend, most economies have made not only was already less dependent on energy imports
up for some of the damage done by the pandemic but had also transitioned from being a net energy
(Figure 1.8). The United States has been an outlier, importer to a net energy exporter. This shift has partly
but generally, scarring has been less pronounced than insulated the US economy from the commodity mar-
initially thought, speaking to the surprising resilience ket disruptions caused by the war.

4 International Monetary Fund | April 2025

 CHAPTER 1 GLOBAL PROSPECTS AND POLICIES

Figure 1.8. Real GDP versus Prepandemic Trend Figure 1.9. Shifts in Energy Imports and Exports
(Index, 2019 = 100)
60 1. Energy Dependency of European Countries
120 1. United States 2. China 140 (Terawatt-hours, unless noted otherwise)
2025 gap = +3.6 2025 gap = —5.3% 40
2020 gap = —4.1% 2020 gap = —3.5% 130
110 20
120
0
110 Average electricity generation dependent on Russian gas, 2016–21
100 Total energy supply dependent on natural gas, 2023 (percent)
−20
Renewable electricity generation growth, 2021–23
100 Electricity generation dependent on natural gas, 2023 (percent)
−40
90 90 DEU FRA NLD POL AUT FIN HUN GRC ITA Other
2019 21 23 25 2019 21 23 25 EU

120 3. Euro Area 4. Brazil 120 20 2. Oil 1.0

(Millions of barrels a day; Share in consumption, right scale)
2025 gap = —2.5% 2025 gap = —0.7% Exports
2020 gap = —7.2% 2020 gap = —5.3% 10 Imports 0.5
110 110 Net exports share (right scale)

0 0

100 100
−10 −0.5

90 90 −20 −1.0
2019 21 23 25 2019 21 23 25 2014 19 23 2014 19 23 2014 19 22
United States Europe China
120 5. AEs Excluding 6. EMDEs Excluding 140
US and Euro Area China and Brazil 300 3. Natural Gas 0.6
(Billions of cubic meters; Share in consumption, right scale)
2025 gap = —1.1% 2025 gap = —6.2% 130 200 Exports 0.4
2020 gap = —5.5% 2020 gap = —7.1% Imports
110 100 0.2
120 Net exports share (right scale)
0 0
110 −100 −0.2
100
100 −200 −0.4
−300 −0.6
90 90
2019 21 23 25 2019 21 23 25 −400 −0.8
2014 19 23 2014 19 23 2014 19 22
United States Europe China
Source: IMF staff calculations.
Note: Solid-line data are from April 2025 World Economic Outlook (WEO). Dashed lines
Sources: Energy Institute; International Energy Agency; and IMF staff calculations.
denote prepandemic trend based on January 2020 WEO Update. AEs = advanced
economies; EMDEs = emerging market and developing economies. Note: In panel 1, data labels use International Organization for Standardization (ISO)
country codes. “Other EU” refers to the remaining European Union (EU) countries.
In panel 2, oil trade includes both crude oil and oil products. In panels 2 and 3,
“Europe” includes European members of the Organisation for Economic Co-operation
Labor productivity growth has declined in recent and Development plus Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus,
years in nearly every country besides the United States Georgia, Gibraltar, Latvia, Lithuania, Malta, Montenegro, North Macedonia, Romania,
and Serbia. Intra-European trade is excluded from “Europe” values.
(Figure 1.10, panel 1). The relative strength in US
labor productivity growth in part reflects stronger
investment (Figure 1.10, panel 2). Capital shallowing in how productivity growth has evolved since the
because of chronic investment weakness can explain pandemic. The rate of job-to-job transitions explains
roughly half of the productivity growth slowdown in a large share of productivity growth in the United
advanced economies since 2010 and about a third of States since 2020 (Dao and Platzer 2024). By contrast,
that in emerging market and developing economies countries where furlough programs were introduced
(Fernald and Li 2023; Igan and others 2024). Greater have typically experienced slower productivity growth.
labor market flexibility may have also played a role Although these programs are designed to preserve skill

International Monetary Fund | April 2025 5

 WORLD ECONOMIC OUTLOOK: A Critical Juncture amid Polic y Shifts

Figure 1.10. Labor Productivity and Capital Investment Figure 1.11. Industrial Production Trends
(Index, Jan. 2019 = 100)
3 1. Labor Productivity Growth
(Percent) 140
United States
China
130
2 Japan
EU4
120
Other EU
ASEAN-5
110
1
100

90
0
2001–10 11–19 20–23 2001–10 11–19 20–23 2001–10 11–19 20–23 80
United States Other AEs EMDEs excluding China
70
180 2. Private Gross Fixed Capital Formation
(Index, 2014 = 100) 60
Jan. Jan. Jan. Jan. Jan. Jan. Dec.
160 United States 2019 20 21 22 23 24 24
China
140 Other AEs
Other EMDEs Sources: United Nations Industrial Development Organization; and IMF staff
calculations.
120 Note: Figure data are calculated as three-month moving averages. “EU4” refers to
France, Germany, Italy, and Spain. “Other EU” refers to all other European Union (EU)
100 countries. ASEAN-5 =Indonesia, Malaysia, the Philippines, Singapore, and Thailand.

80
2012 14 16 18 20 22 24 countries. Industrial production in the United States
Source: IMF staff calculations.
has made it back up and performed better there than
Note: In panel 1, labor productivity is calculated on a per-worker basis. In panel 2, in advanced economy peers.
dashed lines denote the 2014–19 trend. AEs = advanced economies; EMDEs = Adding to the manufacturing headwinds in some
emerging market and developing economies.
economies are demographic headwinds. Countries
around the world are progressively crossing their
matches and prevent skill-diluting unemployment demographic turning points—when the share of
spells, thereby enhancing medium-term productivity, the working-age population starts declining—with
their effectiveness may be compromised by addi- direct implications for labor supply and productiv-
tional factors. The war-related energy shock, coupled ity (see Chapter 2). Germany, Italy, and Japan are
with the persistent nature of these disruptions, could ahead of others with declining shares of working-age
adversely affect productivity by obstructing the neces- population, as is China, while the United States
sary reallocation of resources across different sectors of is not too far behind those countries, but strong
the economy. More generally, traditionally higher job flows of immigrants with quick adaptation to labor
market churn in the United States relative to that in markets have shielded its economy more than other
Europe has likely allowed workers to make job-to-job economies.
transitions more easily.
The productivity growth discrepancies have a
counterpart in how manufacturing activity con- Diminished Policy Space
tinues to shift away from advanced economies to Crucially, much of the available policy space has
emerging market economies. Industrial production already been exhausted in many countries (April 2020,
plunged in all countries at the onset of the pandemic April 2021, and October 2022 WEO reports), limit-
(Figure 1.11). The recovery paths, however, have been ing how much support policymakers can give econo-
decisively different. Production has soared in China mies in case of new negative shocks or a pronounced
and has also expanded in smaller EU economies and downturn. Many countries passed large fiscal support
the ASEAN-5 (Indonesia, Malaysia, the Philippines, packages, first during the pandemic and then as energy
Singapore, Thailand), whereas it has struggled to get and food prices spiked at the onset of Russia’s inva-
back to prepandemic levels in Japan and the largest EU sion of Ukraine. Fiscal policy was expected to pivot

6 International Monetary Fund | April 2025

 CHAPTER 1 GLOBAL PROSPECTS AND POLICIES

somewhat toward consolidation; however, on account Figure 1.12. Fiscal Policy Space
of recent geopolitical developments, some regions
4 1. Fiscal Adjustment Need IQR of PB adjustment
are now poised to pursue fiscal expansion. After the (Percent) Current adjustment (DSPB based)
pandemic, the decisive and forceful monetary policy
response brought inflation down to near central bank 2

targets at relatively little cost to economic activity (see

Chapter 2 of the October 2024 WEO). The hard- 0
earned credibility of central banks played an important
role by limiting de-anchoring of inflation expectations. −2
But the legacies, in the form of high public debt
levels and increased scrutiny of central bank decisions, −4
ITA AUS DEU USA GBR FRA MEX ZAF BRA
remain. G20 advanced G20 emerging

High Public Debt amid Elevated Interest Rates 20 2. General Government Interest Payments 8
Fiscal support during the pandemic and at the onset EMMIEs LIDCs AEs (right scale)
of the war in Ukraine in response to spiking energy 15 6
and food prices supported the recovery. But fiscal mea-
sures sharply increased debt-to-GDP ratios. Despite 10 4
some reductions that have occurred and additional cuts
being planned, budget deficits remain large and cast 5 2
a shadow on the outlook. Fiscal space is now much
tighter than a decade ago, and the fiscal adjustment 0 0
required to stabilize debt ratios is at a historic high 2015 16 17 18 19 20 21 22 23 24

(Figure 1.12, panel 1). 3 3. Real 10-Year Government Bond Yields

At the same time, debt service as a fraction of (Percent per year)
2 United States United Kingdom
fiscal revenue is rising (Figure 1.12, panel 2). The
Japan Euro area
heterogeneous increase reflects cross-country diver- 1
gence in fiscal policy stances, growth and inflation
0
patterns, and debt maturity structures, with rela-
tively larger reliance on short-term debt in some −1
cases. Although servicing costs remain below pan- −2
demic levels in countries where debt was incurred
−3
under favorable conditions during COVID-19, 2015:Q1 17:Q1 19:Q1 21:Q1 23:Q1 25:Q1
effective rates are likely to surpass prepandemic lev-
els as debt rolls over, notably those for low-income Sources: Consensus Economics; Organisation for Economic Co-operation and
Development; and IMF staff calculations.
countries and some emerging market and developing
Note: Panel 1 shows current three-year adjustment need versus historical adjustment.
economies. IQR refers to the interquartile range of three-year primary balance (PB) adjustments
After more than a decade of very low interest over the period 2000–19, calculated as the change between years t + 3 and t using
a rolling window. Current adjustment need is based on the difference between the
rates in advanced economies, real long-term govern- 2028 debt-stabilizing primary balance (DSPB) and the 2025 primary balance excluding
ment bond yields have been on the rise (Figure 1.12, other flows. In panel 2, lines show medians, and shaded area denotes the IQR over all
countries. Panel 3 shows real rates calculated using long-term inflation expectations
panel 3), surging significantly in recent months. from Consensus Forecasts. Data labels in the figure use International Organization for
Higher long-term rates, initially driven by monetary Standardization (ISO) country codes. AEs = advanced economies; EMMIEs = emerging
market and middle-income economies; G20 = Group of Twenty; LIDCs = low-income
policy tightening, are persisting even as the monetary developing countries.
policy cycle has turned, owing to a global rise in term
premiums. In the United States, a combination of
increased issuances, higher expected inflation, and risk Inflation Expectations on Edge after Inflation Scare
premiums compounded the rise in term premiums Inflation expectations now exceed central bank tar-
until mid-January, when long-term interest rates mod- gets in most advanced economies as well as emerging
erated. The recent tariff announcements pushed them market and developing economies, whereas their group
back up again. averages between 2017 and 2021 were at or below

International Monetary Fund | April 2025 7

 WORLD ECONOMIC OUTLOOK: A Critical Juncture amid Polic y Shifts

Figure 1.13. Inflation Deviation from Target Figure 1.14. Changes in Trade Composition
(Percentage points, change in trade shares, 2023–24 minus 2016–17)
4 1. Cross-Country Inflation Expectations
(Percentage point deviation from target, next 12 months)
EU US China Emerging Asia
3
Mexico LAC Russia
2017–21 average 2024 average
2
5 1. Change in Export Shares by Destination 12.2
1 4
3
0 2
−1 1
0
−2 −1
AEs EMDEs −2
2.5 2. Consensus Inflation Expectations −3
(Deviation from central bank target) −4
2.0 −17.5
−5
Five year One year EU US Canada Mexico China Vietnam
1.5
1.0 5 2. Change in Import Shares by Origin 9.8
4
0.5
3
0 2
−0.5 1
0
−1.0 −1
JPN ZAF KOR FRA AUS USA DEU ITA EA CAN GBR IND BRA MEX
−2
Sources: Central bank websites; Consensus Economics; Haver Analytics; and IMF staff −3
calculations. −4
−7.7
Note: In panel 1, sample includes 30 advanced economies (AEs) and 31 emerging −5
EU US Canada Mexico China Vietnam
market and developing economies (EMDEs). The horizontal lines in the middle of the
boxes show the medians, and the upper (lower) limits of the boxes show the third
(first) quartiles. The whiskers show the maximum and minimum within a boundary Sources: IMF, Direction of Trade Statistics; and IMF staff calculations.
of 1.5 times the interquartile range from the upper and lower quartiles, respectively. Note: “Emerging Asia” excludes China and “LAC” excludes Mexico. EMDE = emerging
In panel 2, “one year“ is based on March 2025 data. Data labels use International market and developing economy; EU = European Union; LAC = Latin America and the
Organization for Standardization (ISO) country codes. EA = euro area. Caribbean.

target (Figure 1.13). Yields remain sensitive to infla- increasingly more trade has been occurring within
tion surprises and diminishing fiscal space (April 2025 countries historically aligned with each other rather
GFSR). In economies already operating at or close to than between them (October 2024 WEO). Moreover,
potential and facing potential inflationary pressures, since 2016–17, China and the United States have
including those from new trade policies and exchange diversified their bases of trading partners, decoupling
rate movements, there is less leeway for central banks from each other in terms of export and import linkages
to “look through” new negative supply shocks. (Figure 1.14). In some cases, this diversification has
happened at a microeconomic level along the supply
chain through trade rerouting and production real-
Global Imbalances Arising from Domestic location, such as that which has taken place among
Imbalances emerging markets in Asia, with an increasing share of
Rising geopolitical tensions and widening domestic import origination for the United States and as import
imbalances—in particular, weak demand in China and as well as export counterparts for China. In addition, a
strong demand in the United States—have renewed distinct macroeconomic dimension of trade reallocation
concerns about global imbalances (Gourinchas and has emerged. For example, shifting demand patterns
others 2024). Other nonmarket policies and state inter- have led Europe to import more from China in general,
ventions could also contribute to external imbalances. and from the United States in the energy sector. At the
The volume of international trade in percent of same time, Europe is exporting more to the United
world GDP has been broadly stable, but structural States in other sectors. As a result, Europe’s trade expo-
changes have been taking place nonetheless. Overall, sure to both China and the United States has increased.

8 International Monetary Fund | April 2025

 CHAPTER 1 GLOBAL PROSPECTS AND POLICIES

Figure 1.15. Capital Flows and Exchange Rates Imbalances are also becoming visible in net inter-
national investment positions. The net asset position
250 1. Foreign Direct Investment Trends across Countries
(Capital expenditure, billions of US dollars)
of US residents—US holdings of foreign securities
200
minus foreign holdings of US securities—resumed its
United States United Kingdom
China Japan downward trend in 2023 after increasing briefly in
150 India EU 2022 (April 2025 GFSR). The decline is attributable
not only to US equity prices increasing more than for-
100
eign equity prices but also to rising foreign purchases
50
of US bonds during this period. Recent years have
also seen a concentration of foreign direct investment
0 (FDI) flows toward the United States (Figure 1.15,
2013 15 17 19 21 23 24
panel 1).
120 2. US Dollar Nominal Effective Exchange Rate The dollar appreciated sharply in the run-up to
(Index, 2020 = 100) the US elections in November 2024, with markets
US election
115 expecting higher US growth and tighter monetary
policy. However, since February 2025, the dollar has
110 lost all the gains it achieved in the last quarter of 2024
(Figure 1.15, panel 2), on the back of weaker US
105
growth prospects and uncertainty. Initial depreciation
pressures were particularly pronounced for the curren-
cies of emerging market and developing economies,
100
Jan. Apr. Jul. Oct. Jan. Apr. but they have dissipated following the softening in
2024 24 24 24 25 25
2025 (Figure 1.15, panel 3). Since April 2, global risk
15 3. Exchange Rate Depreciation versus US Dollar appetite has declined substantially, with the risk-off
Oct. 16, 2024–Jan. 16, 2025
environment inducing an offset to the appreciation of
10
Jan. 17–Apr. 8, 2025 emerging market currencies.
Cumulative
5

0 The Outlook: A Range of Possibilities

−5 The swift escalation of trade tensions has generated
−10 extremely high levels of policy ambiguity, making it
more difficult than usual to establish a central global
−15
growth outlook. Therefore, this WEO presents a range
CHE
NGA
POL
CZE
EA
ROU
DNK
PER
PHL
HKG
MAC
DZA
HUN
GBR
ISR
IND
SGP
COL
CAN
CHN
MYS
MEX
EGY
BRA
CHL
ETH
KOR
IDN
TUR
AUS
ZAF

of global growth projections. First is a “reference fore-

Sources: Bank for International Settlements; Haver Analytics; Orbis Crossborder cast” based on measures announced as of April 4. This
Investment; and IMF staff calculations. is what is presented in the tables of this report and the
Note: Panel 1 shows capital expenditure on new and expansion inward foreign WEO database. Second, a pre–April 2 forecast (with a
direct investment projects that have been announced, completed, or postponed
by destination country. Intra-EU investment is excluded for EU values. In panel 2, cutoff date of late March) incorporates all prior policy
exchange rates are based on end-of-month data, with April data up to April 8, 2025. announcements and economic developments since the
An increase indicates appreciation. In panel 3, percentage appreciation is computed
as the difference in log exchange rates. Data labels in the figure use International
October 2024 WEO. Third, a post–April 9 model-based
Organization for Standardization (ISO) country codes. EA = euro area; EU = European forecast is used to quantify the implications of the
Union. announced pause and associated additional exemp-
tions, as well as the escalating tariff rates between
China and the United States.
Global current account balances—the sums of abso-
lute surpluses and deficits—have declined from their
2022 peaks. But they remain larger than the averages Global Assumptions
observed just before the pandemic (see “The Outlook: The reference forecast is predicated on several pro-
A Range of Possibilities” section). The deficit in the jections for global commodity prices, interest rates, and
United States is larger than it was in the late 2010s. fiscal policies (Figure 1.16). Acknowledging the high

International Monetary Fund | April 2025 9

 WORLD ECONOMIC OUTLOOK: A Critical Juncture amid Polic y Shifts

Figure 1.16. Global Assumptions 22.8 percent increase in natural gas prices, the latter
driven up by colder-than-expected weather and the
120 1. Energy and Food Prices
(Index, 2022:Q4 = 100)
halt of Russian gas flow to Europe through Ukraine
110 since January 1. Nonfuel commodity prices are pro-
100 jected to increase by 4.4 percent in 2025. Projected
90 food and beverage prices have been revised upward
Energy Food and beverage compared with those in the January 2025 WEO
80
Update.
70
• Monetary policy projections: The Federal Reserve and
60 the European Central Bank are expected to con-
50 tinue to reduce interest rates in the coming quarters,
2022: 23: 24: 25: 26:
Q4 Q4 Q4 Q4 Q4 albeit at different paces from one another. In the
United States, the federal funds rate is projected to
7 2. Monetary Policy Projections be down to 4 percent at the end of 2025 and reach
(Percent, quarterly average) United States
6 its long-term equilibrium of 2.9 percent at the end
Euro area
5 Japan of 2028. In the euro area, 100 basis points in cuts
4 are expected in 2025 (with three cuts having already
3 occurred this year), representing two more 25 basis
2 point cuts than in the assumptions underlying
1 the October 2024 WEO, bringing the policy rate
0 to 2 percent by the middle of the year. In Japan,
−1 policy rates are expected to be lifted at a similar
2022: 23: 24: 25: 26: 27: pace as assumed in October 2024, gradually rising
Q4 Q4 Q4 Q4 Q4 Q4
over the medium term toward a neutral setting of
1.0 3. Fiscal Policy Projections about 1.5 percent, consistent with keeping inflation
(Percentage points; change in fiscal balance)
and inflation expectations anchored at the Bank of
Japan’s 2 percent target.
0.5 • Fiscal policy projections: Governments in advanced
economies on average are expected to tighten
fiscal policy in 2025–26 and, to a lesser extent, in
0
2027. The general government structural-fiscal-bal-
ance-to-GDP ratio is expected to improve by 1
−0.5 percentage point in the United States in 2025. Yet
2024 25 26 27 2024 25 26 27 it is worth noting that under current policies, US
Advanced economies Emerging market and
developing economies
public debt fails to stabilize, rising from 121 percent
of GDP in 2024 to 130 percent of GDP in 2030.
Source: IMF staff calculations. These projections do not incorporate measures that
Note: In panels 1 and 2, solid lines denote projections from the April 2025 World remain under discussion at the time of publication,
Economic Outlook (WEO) and dashed lines those from the October 2024 WEO. In
panel 3, the fiscal balance used is the general government structural primary balance notably, the net expansionary US budget resolution
in percent of potential GDP. The structural primary balance is the cyclically adjusted (currently, most provisions under the Tax Cuts and
primary balance excluding net interest payments and corrected for a broader range of
noncyclical factors such as changes in asset and commodity prices.
Jobs Act are assumed to expire at the end of 2025).
In the euro area, under the reference forecast, the
primary deficit in Germany is expected to widen
level of prevailing uncertainty, Box 1.1 presents sce- by about 1 percent of GDP by 2030 relative to
narios involving additional trade, fiscal, and structural 2024 and by about 4 percent of GDP relative to the
policies as well as other plausible shocks. January WEO forecast for 2030, with the increase
• Commodity price projections: Prices of fuel com- driven primarily by higher defense spending and
modities are projected to decrease in 2025 by public investment, and this is assumed to generate
7.9 percent, with a 15.5 percent decline in oil prices spillovers to France, Italy, and Spain. The euro area
and a 15.8 percent drop in coal prices offset by a debt-to-GDP ratio is expected to increase from its

10 International Monetary Fund | April 2025

 CHAPTER 1 GLOBAL PROSPECTS AND POLICIES

current 88 percent to 93 percent in 2030, although The US Fair and Reciprocal Plan was introduced
there is significant uncertainty surrounding the on April 2, imposing a 10 percent minimum tar-
assessment of the economic impact of the additional iff on all countries other than Canada and Mexico
fiscal spending. In emerging market and developing and country-specific rates as high as 50 percent
economies, primary fiscal deficits are projected to for roughly 60 countries. The universal 10 percent
widen in 2025 by 0.3 percentage point on average, minimum tariff took effect on April 5, and
followed by fiscal tightening starting in 2026. In the other tariffs were set to take effect on
China, the structural-fiscal-balance-to-GDP ratio is April 9. Exemptions applied to categories of
expected to deteriorate by 1.2 percentage points in goods deemed critical, such as pharmaceuticals,
2025. Public debt in emerging market and devel- semiconductors, energy, and certain minerals.
oping economies continues to rise from its current Countermeasures from Canada, announced
level of 70 percent of GDP, reaching a projected on April 3, consisted of 25 percent tariffs on
83 percent in 2030. non-USMCA-compliant fully assembled vehicles
• Trade policy assumptions: imported from the United States. On April 4,
◦ Tariff announcements between February 1 and China announced 34 percent tariffs, matching the
April 4, with specific details on their implemen- increase in US duties on imports from China, to
tation, are included in the reference forecast. take effect on April 10.
On February 1, executive orders signed by US ◦ Under the reference forecast, trade policy uncer-
President Donald J. Trump imposed tariffs on tainty is assumed to remain elevated through
Canada, China, and Mexico. An additional tariff 2025 and 2026. The perceived unpredictability
of 10 percent on all imports from China came of the current trade landscape is evident from the
into effect on February 4, and another 10 percent significant spike in the daily trade policy indicator
was imposed on March 4. China responded with (Caldara and others 2020), which surged more
tariffs of 10 to 15 percent on imports of select than four standard deviations in just three days
US agricultural products, energy commodities, after April 2, despite the disclosure of the details
and farm equipment, which took effect on of the expected tariffs.
February 10, and on imports of agricultural prod-
ucts, which took effect on March 10. Tariffs of
25 percent on all nonenergy goods imports from
Growth Forecast
Canada (for energy, 10 percent) and of 25 per-
cent on all imports from Mexico took effect on Global Growth: Reference Forecast and Alternatives
March 4, with the exemption of goods compliant In the near term, under the reference forecast,
with the United States–Mexico–Canada Agree- global growth is projected to fall from an estimated
ment (USMCA). Canada announced 25 percent 3.3 percent in 2024 to 2.8 percent in 2025, before
countertariffs on roughly 40 percent of Canadian recovering to 3 percent in 2026. This is lower than
imports of goods from the United States. Mexico the projections in the January 2025 WEO Update,
indicated the intention to respond without by 0.5 percentage point for 2025 and 0.3 percentage
specifying the measures to be employed, hence point for 2026, with downward revisions for nearly all
the reference forecast includes no additional tariff countries (Tables 1.1 and 1.2). The downgrades are
imposed on Mexican imports from the United broad-based across countries and reflect in large part
States. The United States also expanded tariffs on the direct effects of the new trade measures and their
steel and aluminum, effective March 12, remov- indirect effects through trade linkage spillovers, height-
ing all exemptions to the 25 percent tariff on steel ened uncertainty, and deteriorating sentiment. As indi-
imports and increasing the tariff rate on alumi- cated in the illustrative model simulations presented in
num from 10 to 25 percent. On March 26, the Box 1.2, the growth impact of tariffs in the short term
United States announced a 25 percent tariff on all varies across countries, depending on trade relation-
automobiles and auto parts, excluding US content ships, industry compositions, policy responses, and
in auto and auto parts exports. This tariff came opportunities for trade diversification. Fiscal support in
into effect on April 3 for autos, while implemen- some cases (for example, China, euro area) offsets some
tation for auto parts was postponed to May 3. of the negative growth impact.

International Monetary Fund | April 2025 11

WORLD ECONOMIC OUTLOOK: A Critical Juncture amid Polic y Shifts

Table 1.1. Overview of the World Economic Outlook Reference Forecast

(Percent change, unless noted otherwise)
Difference from January Difference from October
Projections 2025 WEO Update1 2024 WEO1
2024 2025 2026 2025 2026 2025 2026
World Output 3.3 2.8 3.0 –0.5 –0.3 –0.4 –0.3
Advanced Economies 1.8 1.4 1.5 –0.5 –0.3 –0.4 –0.3
United States 2.8 1.8 1.7 –0.9 –0.4 –0.4 –0.3
Euro Area 0.9 0.8 1.2 –0.2 –0.2 –0.4 –0.3
Germany –0.2 0.0 0.9 –0.3 –0.2 –0.8 –0.5
France 1.1 0.6 1.0 –0.2 –0.1 –0.5 –0.3
Italy 0.7 0.4 0.8 –0.3 –0.1 –0.4 0.1
Spain 3.2 2.5 1.8 0.2 0.0 0.4 0.0
Japan 0.1 0.6 0.6 –0.5 –0.2 –0.5 –0.2
United Kingdom 1.1 1.1 1.4 –0.5 –0.1 –0.4 –0.1
Canada 1.5 1.4 1.6 –0.6 –0.4 –1.0 –0.4
Other Advanced Economies2 2.2 1.8 2.0 –0.3 –0.3 –0.4 –0.3
Emerging Market and Developing Economies 4.3 3.7 3.9 –0.5 –0.4 –0.5 –0.3
Emerging and Developing Asia 5.3 4.5 4.6 –0.6 –0.5 –0.5 –0.3
China 5.0 4.0 4.0 –0.6 –0.5 –0.5 –0.1
India3 6.5 6.2 6.3 –0.3 –0.2 –0.3 –0.2
Emerging and Developing Europe 3.4 2.1 2.1 –0.1 –0.3 –0.1 –0.4
Russia 4.1 1.5 0.9 0.1 –0.3 0.2 –0.3
Latin America and the Caribbean 2.4 2.0 2.4 –0.5 –0.3 –0.5 –0.3
Brazil 3.4 2.0 2.0 –0.2 –0.2 –0.2 –0.3
Mexico 1.5 –0.3 1.4 –1.7 –0.6 –1.6 –0.6
Middle East and Central Asia 2.4 3.0 3.5 –0.6 –0.4 –0.9 –0.7
Saudi Arabia 1.3 3.0 3.7 –0.3 –0.4 –1.6 –0.7
Sub-Saharan Africa 4.0 3.8 4.2 –0.4 0.0 –0.4 –0.2
Nigeria 3.4 3.0 2.7 –0.2 –0.3 –0.2 –0.3
South Africa 0.6 1.0 1.3 –0.5 –0.3 –0.5 –0.2
Memorandum
World Growth Based on Market Exchange Rates 2.8 2.3 2.4 –0.6 –0.4 –0.5 –0.3
European Union 1.1 1.2 1.5 –0.2 –0.2 –0.4 –0.2
ASEAN-54 4.6 4.0 3.9 –0.6 –0.6 –0.5 –0.6
Middle East and North Africa 1.8 2.6 3.4 –0.9 –0.5 –1.4 –0.8
Emerging Market and Middle-Income Economies 4.3 3.7 3.8 –0.5 –0.4 –0.5 –0.3
Low-Income Developing Countries 4.0 4.2 5.2 –0.4 –0.2 –0.5 –0.4
World Trade Volume (goods and services) 3.8 1.7 2.5 –1.5 –0.8 –1.7 –0.9
Imports
Advanced Economies 2.4 1.9 2.0 –0.3 –0.4 –0.5 –0.5
Emerging Market and Developing Economies 5.8 2.0 3.4 –3.0 –1.1 –2.9 –1.2
Exports
Advanced Economies 2.1 1.2 2.0 –0.9 –0.6 –1.5 –1.0
Emerging Market and Developing Economies 6.7 1.6 3.0 –3.4 –1.7 –3.0 –1.3
Commodity Prices (US dollars)
Oil5 –1.8 –15.5 –6.8 –3.8 –4.2 –5.1 –3.2
Nonfuel (average based on world commodity import 3.7 4.4 0.2 1.9 0.3 4.6 –0.6
weights)
World Consumer Prices6 5.7 4.3 3.6 0.1 0.1 0.0 0.0
Advanced Economies7 2.6 2.5 2.2 0.4 0.2 0.5 0.2
Emerging Market and Developing Economies6 7.7 5.5 4.6 –0.1 0.1 –0.4 –0.1
Source: IMF staff estimates.
Note: See Box A2 of the WEO Statistical Appendix for a list of economies whose projections have been revised based on developments in commodity markets
and international trade as of April 4, 2025. Real effective exchange rates are assumed to remain constant at the levels prevailing during March 6, 2025–April 3,
2025. Economies are listed on the basis of economic size. The aggregated quarterly data are seasonally adjusted. WEO = World Economic Outlook.
1 Difference based on rounded figures for the current, January 2025 WEO Update, and October 2024 WEO forecasts.
2 Excludes the Group of Seven (Canada, France, Germany, Italy, Japan, United Kingdom, United States) and euro area countries.
3 For India, data and forecasts are presented on a fiscal year basis, and GDP from 2011 onward is based on GDP at market prices with fiscal year 2011/12 as a

base year.
4 Indonesia, Malaysia, the Philippines, Singapore, and Thailand.
5 Simple average of prices of UK Brent, Dubai Fateh, and West Texas Intermediate crude oil. The average price of oil in US dollars a barrel was $79.17 in 2024;

the assumed price, based on futures markets, is $66.94 in 2025 and $62.38 in 2026.
6 Excludes Venezuela. See the country-specific note for Venezuela in the “Country Notes” section of the Statistical Appendix.
7 The assumed inflation rates for 2025 and 2026, respectively, are as follows: 2.1 percent and 1.9 percent for the euro area, 2.4 percent and 1.7 percent for

Japan, and 3.0 percent and 2.5 percent for the United States.

12 International Monetary Fund | April 2025

 CHAPTER 1 GLOBAL PROSPECTS AND POLICIES

Table 1.1. Overview of the World Economic Outlook Reference Forecast (continued)
(Percent change, unless noted otherwise)
Q4 over Q48
Difference from January Difference from October
Projections 2025 WEO Update1 2024 WEO1
2024 2025 2026 2025 2026 2025 2026
World Output 3.5 2.4 3.0 –0.8 –0.1 –0.7 ...
Advanced Economies 1.9 1.2 1.5 –0.7 –0.2 –0.5 ...
United States 2.5 1.5 1.7 –0.9 –0.4 –0.4 ...
Euro Area 1.2 0.7 1.4 –0.5 0.0 –0.6 ...
Germany –0.2 0.3 1.0 –0.5 0.1 –1.0 ...
France 0.6 0.8 1.0 –0.2 –0.2 –0.7 ...
Italy 0.6 0.8 0.9 –0.2 0.2 0.2 ...
Spain 3.4 2.0 1.7 0.1 –0.3 0.0 ...
Japan 1.2 –0.4 1.3 –1.2 0.6 –0.6 ...
United Kingdom 1.5 1.7 0.9 –0.1 –0.4 0.6 ...
Canada 2.4 0.6 2.2 –1.5 0.3 –1.5 ...
Other Advanced Economies2 1.9 2.2 1.7 –0.6 0.0 –0.4 ...
Emerging Market and Developing Economies 4.8 3.3 4.0 –0.9 –0.2 –1.0 ...
Emerging and Developing Asia 5.8 4.0 4.7 –0.9 –0.4 –1.0 ...
China 5.4 3.2 4.2 –1.3 –0.3 –1.5 ...
India3 7.5 6.2 6.3 –0.3 –0.2 –0.3 ...
Emerging and Developing Europe 3.0 1.8 2.0 –1.1 0.4 –0.9 ...
Russia 3.7 0.4 0.8 –0.8 –0.4 –0.8 ...
Latin America and the Caribbean 2.3 1.6 2.8 –1.1 0.4 –1.3 ...
Brazil 3.3 2.0 2.2 –0.1 –0.1 –0.2 ...
Mexico 0.5 –0.2 2.0 –1.6 –0.1 –1.6 ...
Middle East and Central Asia ... ... ... ... ... ... ...
Saudi Arabia 4.5 2.5 3.7 1.3 –0.4 –2.1 ...
Sub-Saharan Africa ... ... ... ... ... ... ...
Nigeria 3.5 3.7 2.8 0.0 –1.0 0.0 ...
South Africa 0.8 0.8 1.6 0.2 –0.6 –0.2 ...
Memorandum
World Growth Based on Market Exchange Rates 3.0 1.9 2.5 –0.8 –0.1 –0.7 ...
European Union 1.5 1.1 1.7 –0.4 0.0 –0.3 ...
ASEAN-54 4.7 3.6 4.3 –0.3 –0.7 0.6 ...
Middle East and North Africa ... ... ... ... ... ... ...
Emerging Market and Middle-Income Economies 4.8 3.3 4.0 –0.9 –0.2 –1.0 ...
Low-Income Developing Countries ... ... ... ... ... ... ...
Commodity Prices (US dollars)
Oil5 –10.1 –14.1 –0.7 –9.1 1.5 –9.2 ...
Nonfuel (average based on world commodity import 8.3 1.2 0.4 1.1 –0.1 0.7 ...
weights)
World Consumer Prices6 4.8 3.5 3.0 0.0 0.0 0.0 ...
Advanced Economies7 2.4 2.4 2.1 0.3 0.1 0.4 ...
Emerging Market and Developing Economies6 6.7 4.4 3.6 –0.2 –0.2 –0.3 ...
8 Forworld output, the quarterly estimates and projections account for approximately 90 percent of annual world output at purchasing-power-parity weights.
For emerging market and developing economies, the quarterly estimates and projections account for approximately 85 percent of annual emerging market and
developing economies’ output at purchasing-power-parity weights.

Given uncertainty over where trade policy could oil prices and only those trade policies announced
settle, the two alternative growth outlooks are as between February 1 and March 12, namely, tariffs
follows: on Canada and Mexico, the first wave of tariffs on
• Under the pre–April 2 forecast, global growth would China, associated responses by Canada and China,
be 3.2 percent for both 2025 and 2026, lower by and sectoral tariffs on steel and aluminum. The
0.1 percentage point in each year compared with the downgrades to growth under this outlook are largest
January 2025 WEO Update. This forecast deviates for the countries directly involved, but growth in
from the global assumptions listed above on trade other economies is also lower because of increased
policy announcements, the level of uncertainty, uncertainty relative to that in January and tariff-re-
and commodity prices. It is predicated on higher lated spillovers.

International Monetary Fund | April 2025 13

WORLD ECONOMIC OUTLOOK: A Critical Juncture amid Polic y Shifts

Table 1.2. Overview of the World Economic Outlook Reference Forecast at Market Exchange Rate Weights
(Percent change)
Difference from January Difference from October
Projections 2025 WEO Update1 2024 WEO1
2024 2025 2026 2025 2026 2025 2026
World Output 2.8 2.3 2.4 –0.6 –0.4 –0.5 –0.3
Advanced Economies 1.8 1.4 1.5 –0.6 –0.3 –0.4 –0.3
Emerging Market and Developing Economies 4.1 3.5 3.7 –0.6 –0.4 –0.6 –0.3
Emerging and Developing Asia 5.2 4.3 4.4 –0.6 –0.5 –0.5 –0.2
Emerging and Developing Europe 3.3 2.1 2.3 –0.2 –0.2 –0.2 –0.3
Latin America and the Caribbean 2.2 1.9 2.2 –0.6 –0.4 –0.5 –0.4
Middle East and Central Asia 2.0 2.9 3.6 –0.8 –0.4 –1.1 –0.5
Sub-Saharan Africa 3.7 3.7 4.2 –0.4 0.0 –0.4 –0.1
Memorandum
European Union 1.0 1.0 1.4 –0.3 –0.2 –0.5 –0.3
Middle East and North Africa 1.6 2.7 3.5 –0.9 –0.5 –1.3 –0.7
Emerging Market and Middle-Income Economies 4.2 3.5 3.6 –0.6 –0.5 –0.5 –0.3
Low-Income Developing Countries 3.9 4.2 5.3 –0.5 –0.2 –0.6 –0.4
Source: IMF staff estimates.
Note: The aggregate growth rates are calculated as a weighted average, in which a moving average of nominal GDP in US dollars for the preceding three years is
used as the weight. WEO = World Economic Outlook.
1 Difference based on rounded figures for the current, January 2025 WEO Update, and October 2024 WEO forecasts.

• The post–April 9 model-based forecast incorporates 2025 and about 2.9 percent for 2026. This is
the tariff announcements made after April 4 and, similar to the estimates for global growth in the
hence, not included in the reference forecast. reference forecast, albeit with a different compo-
◦ On April 9, the United States announced a sition of growth rates across countries. The gains
90-day pause on the higher tariff rates imposed from lower effective tariff rates for those coun-
on some countries but maintained the 10 percent tries that were previously subject to higher tariffs
minimum on all countries while further raising would now be offset by poorer growth outcomes
tariffs on Chinese goods as a countermeasure to in China and the United States—due to the esca-
China’s tariff response, which China then coun- lating tariff rates—that would propagate through
tered again. The EU responded with 25 percent global supply chains. Further, the losses in China
tariffs on a range of US imports, which were also and the United States would become larger
paused for 90 days. On April 11, the United in 2026 and beyond, while the gains in other
States announced that it would exempt smart- regions would fade, leading to weaker global
phones, laptops, and other electronic devices and outcomes than the reference forecast.
components from the April 2 tariffs, while China
raised tariffs on US goods further, with the higher Growth Forecast for Advanced Economies
rate taking effect on April 12. As of April 14— For advanced economies, growth under the refer-
the cutoff date for data and information used ence forecast is projected to drop from an estimated
in this chapter—the US effective tariff rate 1.8 percent in 2024 to 1.4 percent in 2025 and
on Chinese goods was 115 percent, while that 1.5 percent in 2026. Growth for 2025 is now pro-
imposed by China on US goods was 146 percent, jected to be 0.5 percentage point lower relative to
and the US effective tariff rate on the world stood that in January 2025 WEO Update projections. The
at about 25 percent, up from under 3 percent in forecasts for 2025 include significant downward revi-
January 2025. sions for Canada, Japan, the United Kingdom, and the
◦ If the measures announced between April 5 United States and an upward revision for Spain.
and 14 were considered in isolation from the • For the United States, growth is projected to decrease
associated market fallout and policy-induced in 2025 to 1.8 percent, 1 percentage point lower
uncertainty and assumed to be permanent, global than the rate for 2024 as well as 0.9 percentage point
growth for 2025 would be about 2.8 percent for lower than the forecast rate in the January 2025

14 International Monetary Fund | April 2025

 CHAPTER 1 GLOBAL PROSPECTS AND POLICIES

WEO Update. The downward revision is a result of an estimated 4.3 percent in 2024. This is 0.5 and
greater policy uncertainty, trade tensions, and a softer 0.4 percentage point lower, respectively, compared with
demand outlook, given slower-than-anticipated con- the rate projected in the January 2025 WEO Update.
sumption growth. Tariffs are also expected to weigh • After a marked slowdown in 2024, growth in
on growth in 2026, which is projected at 1.7 percent emerging and developing Asia is expected to decline
amid moderate private consumption. further to 4.5 percent in 2025 and 4.6 percent in
• Growth in the euro area is expected to decline 2026. Emerging and developing Asia, particularly
slightly to 0.8 percent in 2025, before picking up Association of Southeast Asian Nations (ASEAN)
modestly to 1.2 percent in 2026. Rising uncertainty countries, has been among the most affected by
and tariffs are key drivers of the subdued growth the April tariffs. For China, 2025 GDP growth is
in 2025. Offsetting forces that support the modest revised downward to 4.0 percent from 4.6 percent
pickup in 2026 include stronger consumption on in the January 2025 WEO Update. This reflects the
the back of rising real wages and a projected fiscal impact of recently implemented tariffs, which offset
easing in Germany following major changes to its the stronger carryover from 2024 (as a result of a
fiscal rule (the “debt brake”). Within the region, stronger-than-expected fourth quarter) and fiscal
Spain’s momentum contrasts with the sluggish expansion in the budget. Growth in 2026 is also
dynamics elsewhere. The growth projection for revised downward to 4.0 percent from 4.5 percent
2025 for Spain is 2.5 percent, an upward revision of in the January 2025 WEO Update on the back of
0.2 percentage point from that in the January 2025 prolonged trade policy uncertainty and the tariffs
WEO Update. This reflects a large carryover from now in place. For India, the growth outlook is
better-than-expected outturns in 2024 and recon- relatively more stable at 6.2 percent in 2025, sup-
struction activity following floods. ported by private consumption, particularly in rural
• Among other advanced economies, several down- areas, but this rate is 0.3 percentage point lower
ward revisions stand out. For Canada, growth than that in the January 2025 WEO Update on
forecasts are revised downward by 0.6 percent- account of higher levels of trade tensions and global
age point for 2025 and by 0.4 percentage point uncertainty.
for 2026. This largely reflects the new tariffs on • For Latin America and the Caribbean, growth is
exports to the United States that came into effect projected to moderate from 2.4 percent in 2024 to
in March as well as heightened uncertainty and 2.0 percent in 2025, before rebounding to 2.4 per-
geopolitical tensions. For Japan, the growth projec- cent in 2026. The forecasts are revised downward by
tion for 2025 is 0.6 percent, marking a downgrade 0.5 percentage point for 2025 and 0.3 percentage
of 0.5 percentage point relative to the forecast in point in 2026 compared with those in the January
January. The effect of tariffs announced on April 2 2025 WEO Update. The revisions owe largely to
and associated uncertainty offset the expected a significant downgrade to growth in Mexico, by
strengthening of private consumption, with 1.7 percentage points for 2025 and 0.6 percentage
above-inflation wage growth boosting household point for 2026, reflecting weaker-than-expected
disposable income. For the United Kingdom, the activity in late 2024 and early 2025 as well as the
growth projection for 2025 is 1.1 percent, lower impact of tariffs imposed by the United States, the
by 0.5 percentage point compared to the forecast associated uncertainty and geopolitical tensions, and
in January. This reflects a smaller carryover from a tightening of financing conditions.
2024, the impact of recent tariff announcements, • Growth in emerging and developing Europe is pro-
an increase in gilt yields, and weaker private jected to slow down considerably, from 3.4 percent
consumption amid higher inflation as a result of in 2024 to 2.1 percent in 2025 and 2026. This
regulated prices and energy costs. reflects a sharp drop in growth in Russia from
4.1 percent in 2024 to 1.5 percent in 2025 and to
Growth Forecast for Emerging Market and 0.9 percent in 2026 as private consumption and
Developing Economies investment decelerate amid reduced tightness in the
For emerging market and developing economies, growth labor market and slower wage growth. Compared
under the reference forecast is projected to drop to with that projected in the January 2025 WEO
3.7 percent in 2025 and 3.9 percent in 2026, following Update, growth in Russia has been revised slightly

International Monetary Fund | April 2025 15

WORLD ECONOMIC OUTLOOK: A Critical Juncture amid Polic y Shifts

upward for 2025 thanks to stronger-than-expected Figure 1.17. Inflation Forecasts

outturns in the data for 2024. For Türkiye, growth is
3.5 1. Evolution of 2025 Inflation Forecasts 4.5
projected to bottom out in 2025 at 2.7 percent and (Median, percent, year over year)
accelerate to 3.2 percent in 2026, owing to recent 3.0

pivots in monetary policy. 2.5 3.5

• The Middle East and Central Asia is projected to 2.0

1.5 United States 2.5
come out of several years of subdued growth, with Euro area
the rate accelerating from an estimated 2.4 percent 1.0 China
0.5 AEs excluding US and euro area 1.5
in 2024 to 3.0 percent in 2025 and to 3.5 percent EMDEs excluding China (right scale)
in 2026 as the effects of disruptions to oil pro- 0
duction and shipping dissipate and the impact of −0.5 0.5
Jan. Apr. Jul. Oct. Jan. Apr.
ongoing conflicts lessens. Compared with that in 2024 24 24 24 25 25
January, the projection is revised downward, reflect-
ing a more gradual resumption of oil production, 0.4 2. Distribution of One-Year-Ahead Inflation Projections
(Density)
persistent spillovers from conflicts, and slower­-
than-expected progress on structural reforms. 0.3 April 2019 WEO
April 2024 WEO
• For sub-Saharan Africa, growth is expected April 2025 WEO
to decline slightly from 4 percent in 2024 to 0.2
3.8 percent in 2025 and recover modestly in 2026,
lifting to 4.2 percent. Among the larger economies, 0.1
the growth forecast in Nigeria is revised downward
by 0.2 percentage point for 2025 and 0.3 per- 0
centage point for 2026, owing to lower oil prices, −1 0 1 2 3 4 5 6 7 8

and that in South Africa is revised downward by Source: IMF staff calculations.
0.5 percentage point for 2025 and 0.3 percentage Note: In panel 1, the x-axis shows the months the World Economic Outlook (WEO) is
point for 2026, reflecting slowing momentum from published. Panel 2 displays the distribution of one-year-ahead year-over-year inflation
projections from the WEO reports using estimated kernel densities. The panel shows
a weaker-than-expected 2024 outturn, deteriorat- the 50 largest economies excluding Argentina, Bangladesh, Egypt, Iran, Nigeria,
ing sentiment due to heightened uncertainty, the Pakistan, Türkiye, and Ukraine. AEs = advanced economies; EMDEs = emerging
intensification of protectionist policies, and a deeper market and developing economies.

slowdown in major economies. South Sudan has a

downward revision of 31.5 percentage points for
2025 on account of the delay in in the resumption
of oil production from a damaged pipeline. 2025 WEO Update, the UK inflation forecast has been
revised upward by 0.7 percentage point and the US fore-
cast by 1.0 percentage point. For the United States, this
Inflation Forecast reflects stubborn price dynamics in the services sector as
Under the reference forecast, global headline well as a recent uptick in the growth of the price of core
inflation is expected to decline to 4.3 percent in 2025 goods (excluding food and energy) and the supply shock
and to 3.6 percent in 2026. Inflation is projected to from recent tariffs. In the United Kingdom, it primarily
converge back to target earlier in advanced econo- reflects one-off regulated price changes. In the euro area,
mies, reaching 2.2 percent in 2026, compared with the forecast is unchanged.
emerging market and developing economies, for which Among emerging market and developing economies,
it declines to 4.6 percent over the same time hori- the revisions are mixed. In emerging and developing
zon. Compared with that in the January 2025 WEO Asia, inflationary pressures are expected to be even
Update, the global inflation forecast is slightly higher. more muted, with a downward revision of 0.5 per-
For advanced economies, the inflation forecast for centage point to 2025 forecasts relative to those in
2025 has been revised upward by 0.4 percentage point January. After a series of downward surprises, inflation
since January. The United Kingdom and the United in China is expected to remain subdued (Figure 1.17,
States stand out in both the direction and the magnitude panel 1). In emerging and developing Europe, Russia
of their revisions. Compared with those in the January and Ukraine have seen upward revisions for 2025,

16 International Monetary Fund | April 2025

 CHAPTER 1 GLOBAL PROSPECTS AND POLICIES

and Russia for 2026, driving overall revisions of Figure 1.18. Medium-Term Outlook
1.5 percentage points in 2025 and 1.0 percentage (Percent)
point in 2026. In Latin America and the Caribbean,
7 45-degree line
upward revisions for Bolivia, Brazil, and Venezuela AEs
EMDEs
have been offset by downward revisions for Argentina 6

2030 growth forecast, April 2025 WEO

and elsewhere, bringing the overall revision for the
5
region for 2025 to –0.3 percentage point.
The inflation outlook as a whole has improved but 4
has not yet fully returned to prepandemic patterns
(Figure 1.17, panel 2), and it is subject to high uncer- 3
tainty. In particular, the effects of recently imposed 2
tariffs on inflation across countries will depend on
whether the tariffs are perceived to be temporary or 1
permanent, the extent to which firms adjust margins to
0
offset increased import costs, and whether imports are 0 1 2 3 4 5 6 7 8
invoiced in US dollars or local currency (see Box 1.2). 2025 growth forecast, January 2020 WEO Update
Cross-country implications will differ too. Trade tariffs
Source: IMF staff calculations.
act as a supply shock on tariffing countries, reducing
Note: Figure plots 50 largest economies (21 AEs and 29 EMDEs) in terms of 2024 GDP
productivity and increasing unit costs. Tariffed coun- in purchasing-power-parity international dollars. AEs = advanced economies; EMDEs =
tries face a negative demand shock as export demand emerging market and developing economies; WEO = World Economic Outlook.
diminishes, exerting downward pressure on prices. In
both cases, trade uncertainty adds a layer of demand
World Trade Outlook
shock as businesses and households respond by
postponing investment and spending, and this effect Global trade growth is expected to slow down in
may be amplified by tighter financial conditions and 2025 to 1.7 percentage point, a downward revision
increased exchange rate volatility. of 1.5 percentage point since the January 2025 WEO
Update. This forecast reflects increased tariff restric-
tions affecting trade flows and, to a lesser extent, the
Medium-Term Outlook waning effects of cyclical factors that have underpinned
Lacking structural reform momentum and facing the recent rise in goods trade.
headwinds from a range of challenges, global economic Meanwhile, global current account balances are
performance is expected to remain mediocre. The five- expected to narrow somewhat (Figure 1.19). The
year-ahead growth forecast stands at 3.2 percent, below widening of current account balances in 2024 reflected
the historical average during 2000–19 of 3.7 percent. widening domestic imbalances and a pickup in global
For many emerging market and developing economies, goods trade. Over the medium term, global balances
as well as for quite a few advanced economies, current are expected to narrow gradually as the effects of these
medium-term growth forecasts fall short of those made factors wane. Creditor and debtor stock positions are
in 2020 (Figure 1.18). The fact that the moderation of estimated to have increased in 2024, with the increases
medium-term growth is more evident among emerging reflecting widening current account balances. They are
market and developing economies implies a slowdown expected to moderate slightly over the medium term
in income convergence (Chapter 3 of the April 2024 as current account balances gradually narrow. In some
WEO). economies, gross external liabilities remain large from a
A key and increasingly common driver of these slug- historical perspective and pose risks of external stress.
gish medium-term growth dynamics is demographics.
Population aging is expected to weigh significantly on
productivity, labor force participation, and ultimately, Risks to the Outlook: Tilted to the
growth (Chapter 2). Population movements across Downside
borders could help alleviate some of the demographic Overall, risks to the outlook are tilted to the
drag, and policies governing these movements can have downside, in both the short and the medium term.
complex spillovers onto growth (Chapter 3). This section discusses the most prominent risks and

International Monetary Fund | April 2025 17

 WORLD ECONOMIC OUTLOOK: A Critical Juncture amid Polic y Shifts

Figure 1.19. Current Account and International Investment United States, but also a large set of countries in Asia
Positions and Europe in the medium term. Some countries may
(Percent of global GDP) harness the opportunity to consolidate their trade net-
European creditors United States
works, reconfigure their position in global value chains,
European debtors China and, hence, experience positive effects, especially if
Japan Others traded goods embed a rising share of domestic value
Oil exporters Overall balance (right scale)
added, as seen in the case of Vietnam in 2018 (Schulze
3 1. Global Current Account Balance 6 and Xin, forthcoming). However, adverse effects could
accumulate over time. Their magnitude would depend
2 4
on how quickly countries can boost domestic con-
1 2 sumption, reroute trade flows, and increase produc-
0 0 tivity and competitiveness, as well as on the reach and
intensity of the countermeasures, including nontariff
−1 −2
measures. The emergence of new trading clusters is
−2 −4 likely to fragment FDI flows and weigh on capital
−3 −6
accumulation (see Chapter 4 of the April 2024 WEO).
2005 07 09 11 13 15 17 19 21 23 25 27 29 30 Rising geopolitical tensions could open up the possi-
bility of sudden changes in the international monetary
30 2. Global International Investment Position
system, with potential implications for macrofinancial
20 stability. A reversal of global economic integration
10 might also trigger suboptimal relocation of production
units and technological decoupling, with negative
0
growth effects in the longer term because of resource
−10 misallocation, loss of knowledge hubs, contraction in
bank credit, and financial stability risks (Aiyar and
−20
others 2023; Campos and others 2023; Gopinath and
−30 others 2024; Chapter 2 of the April 2025 GFSR).
2005 07 09 11 13 15 17 19 21 23 25 27 29 30
A trade war could also fuel inflationary pressures,
Source: IMF staff calculations. primarily through rising import prices (Fajgelbaum
Note: “European creditors” are Austria, Belgium, Denmark, Finland, Germany, Italy, and Khandelwal 2022). Although the simulations
Luxembourg, The Netherlands, Norway, Sweden, and Switzerland; “European debtors”
are Cyprus, Greece, Ireland, Portugal, Slovenia, and Spain; “oil exporters” are Algeria,
in Box 1.1 indicate rather moderate effects, several
Azerbaijan, Iran, Kazakhstan, Kuwait, Nigeria, Oman, Qatar, Russia, Saudi Arabia, the factors could lead to higher inflationary pressures in
United Arab Emirates, and Venezuela. some countries. First, with more than 80 percent of
trade invoicing in US dollars, additional pressure may
uncertainties surrounding the outlook in detail. arise if the US dollar appreciates, as observed during
Box 1.1 presents model-based analysis that quantifies previous episodes of trade uncertainty and financial
risks to the global outlook and plausible scenarios. market volatility. Second, inflation expectations are
currently higher than central bank targets and, in some
cases, on the rise. Third, restrictions on commodities
Downside Risks may lead to significant price shifts, particularly since
Although some risks outlined in the January 2025 price elasticities of critical minerals and highly traded
WEO Update have materialized and are now incor- agricultural goods are especially vulnerable to trade
porated in the reference forecast, the likelihood of fragmentation because of their concentrated produc-
additional adverse risks being realized is increasing. tion, difficulties in substitution, and essential roles in
Escalating trade measures and prolonged trade policy manufacturing and key technologies (see Chapter 3 of
uncertainty: Box 1.1 illustrates the impact of ratchet- the October 2023 WEO). Price increases are also likely
ing up a trade war. World GDP would be negatively to have negative distributional effects across and within
affected, though the magnitude of the effect would countries. Tariffs on agricultural commodities could
vary across countries. Those directly targeted by new raise food security concerns, particularly in low-income
tariffs would be most affected, notably China and the countries. Tariffs tend to raise prices of tradables, on

18 International Monetary Fund | April 2025

 CHAPTER 1 GLOBAL PROSPECTS AND POLICIES

Figure 1.20. Rising Trade Restrictions and Fragmentation Figure 1.21. Spillovers from US Dollar Appreciation
Concerns
6 1. Effect of US Dollar Appreciation on Global GDP
3,500 1. Trade-Restrictive Measures (Percent change)
(Number of measures) 4
Advanced economies
3,000
Goods Emerging market economies
2
2,500 Services
Investments 0
2,000
1,500 −2

1,000 −4
500 −6
0 4 8 12
0
2009 11 13 15 17 19 21 23 25 Quarter

400 2. Fragmentation Keywords in Earnings Calls 200 2. Effect of US Dollar Appreciation on EMDE Inflation 1.0
(Indices, 2013–15 = 100) (Basis points; Percent, right scale)
12-month pass-through to inflation from 0.8
300 150
US dollar depreciation
Pass-through elasticity (right scale) 0.6
200 100
0.4

100 50
0.2

0 0 0
2009: 11: 13: 15: 17: 19: 21: 23: 25: TUR ZAF BRA IDN POL ROU HUN MEX CHL IND COL
Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1
Source: IMF staff calculations.
Sources: Global Trade Alert; Refinitiv Eikon; and IMF staff calculations. Note: In panel 1, impulse responses from the IMF External Sector Report 2023
Note: In panel 1, data are based on a count of measures and include adjustment for show the effects of a 10 percent appreciation in the nominal US dollar index with
reporting lags. In panel 2, fragmentation indices measure the average number of 90 percent confidence intervals. Real GDP is measured in national currencies at
sentences, per thousand earnings calls, that mention at least one of the following constant prices. “Advanced economies” exclude countries with weights in the US
keywords: deglobalization, reshoring, onshoring, nearshoring, friend-shoring, dollar index that are larger than 4 percent in 2020: Canada, France, Germany,
localization, regionalization. Ireland, Italy, Japan, Switzerland, and the United Kingdom. In panel 2, estimates
are based on Carrière-Swallow and others’ (2021) bilateral pass-through and foreign
exchange depreciation against the US dollar between mid-September 2024 and the
which poor households spend relatively more (Cravino beginning of January 2025. Data labels in the figure use International Organization
for Standardization (ISO) country codes. EMDE = emerging market and developing
and Levchenko 2017; Carroll and Hur 2020), and economy.
may increase returns to capital over labor, benefiting
the wealthy. Welfare losses are typically concentrated
among the poor and the retired, even when tariff reve- reduced US investment by approximately 1.5 percent
nues offset distortionary taxes (Carroll and Hur 2023). in 2018 (Caldara and others 2020). Moreover, uncer-
Beyond the risk of additional trade barriers, pro- tainty diminishes demand by undermining confidence
longed uncertainty regarding trade policies poses other and erodes consumer income in the medium term by
risks to investment and growth (Box 1.1 shows the curtailing investment and stifling trade (Handley and
effect of increased uncertainty over macroeconomic Limão 2017). Previous episodes of heightened trade
policies more generally). In just the first quarter policy uncertainty led to persistent appreciation of the
of 2025, the number of new restrictive measures US dollar (Albrizio and others, forthcoming), harming
announced increased by 16 percent relative to that in exports from the United States and dollarized countries
December 2024, with actions ratcheting from April 2 and generating negative spillovers to emerging market
onward. Firms’ concerns about fragmentation spiked and developing economies. If, in the current episode,
along with the escalation in the use of restrictive a US dollar appreciation was to materialize, inflation
measures (Figure 1.20). If uncertainty remains high pressures could be sizable where country-specific cir-
for long, firms may delay investment projects, with a cumstances amplify the amount of pass-through from
consequent reduction in global investment. Indeed, currency depreciation (Figure 1.21), especially in peri-
empirically, trade uncertainty is estimated to have ods of high uncertainty and already-elevated inflation

International Monetary Fund | April 2025 19

WORLD ECONOMIC OUTLOOK: A Critical Juncture amid Polic y Shifts

levels (Carrière-Swallow and others 2024). However, of capital in safe haven countries and assets could exac-
the policy-uncertainty-driven surge in risk aversion erbate capital imbalances and misallocation. Moreover,
and the decline in US growth prospects might lead to the structural pressure on long-term yields could con-
a depreciation of the US dollar. A disorderly and large strain the fiscal space, already limited, that is necessary
depreciation of the US dollar could bring additional to heal the economic scars left by the pandemic or
financial market volatility. meet new spending needs, or it could exacerbate fiscal
Financial market volatility and correction: In some sustainability concerns, especially in high-debt coun-
countries, if inflation persists or regains upward tries (see the April 2025 Fiscal Monitor). Consequently,
momentum because of new policies, central banks may this could lead to a debt spiral dynamic in which
maintain interest rates at higher levels than currently borrowing costs escalate as fiscal adjustments become
anticipated. This could result in cross-country interest increasingly unattainable.
rate differentials, which could trigger capital outflows, Rising social discontent: The legacy of the cost-of-
and tighter financial conditions, especially in emerging living crisis, combined with reduced medium-term
market and developing economies (as illustrated in growth prospects, may exacerbate polarization and
Box 1.1). Financial market risks may be compounded social unrest, hindering necessary reforms for growth.
by future corporate earnings failing to meet expecta- Currently, the risk of unrest is pronounced in Africa,
tions, large and unpredictable policy shifts, or renewed where conflicts and rising food and energy prices have
geopolitical risks (see Chapter 2 of the April 2025 had a severe impact on vulnerable nations with limited
GFSR). The US dollar would typically be expected to fiscal space, and in Asia, where democratic participa-
appreciate if financial conditions deteriorate sharply, tion in some incumbent regimes is limited and inequal-
but the international monetary system could experience ities are rising (Barrett and others 2022). Although
a sudden reset, with potentially major implications for emerging market and developing economies have
the dollar as its main pillar. Worsening global financial demonstrated resilience over the past four years, their
conditions and broader disruptions to the system could capacity to manage domestic challenges, especially high
trigger balance of payments crises in small countries debt levels, in a deteriorating global environment may
with limited market access, high refinancing needs, and be tested. A resurgence in food and energy price infla-
weak negotiation capacity. These risks may be ampli- tion, driven by commodity market fragmentation or
fied for commodity exporters amid a continued decline intensification of climate-related disasters, could worsen
in commodity prices, particularly those for oil and cop- living conditions and heighten food security concerns,
per, which typically serve as indicators of an impending particularly in low-income countries. Across regions,
recession by signaling a slowdown in industrial activity a common element of social unrest episodes relates to
in importers, such as China. A deeper financial market discontent about public representation and governance,
correction than what was recently experienced could which may increase the likelihood of structural reform
be triggered by weaker-than-expected US growth, in failure (see Chapter 3 of the October 2024 WEO).
part induced by policy shifts, and reverberate through Increasing challenges to international cooperation: The
highly leveraged positions in nonbank financial institu- increasing frequency and economic cost of natural disas-
tions and firms with high near-term refinancing needs. ters (Figure 1.22) and the intensification of conflicts—
In addition, an excessive rollback of financial regula- disruptive, even if localized—demand continuous and
tions may lead to boom-bust dynamics, with negative coordinated international action. Scaling back climate
repercussions for household wealth, raising systemic adaptation and international aid would risk making past
stress and creating adverse spillover effects throughout investments ineffective, undermining progress toward a
the global economy. In Europe, a market correction greener and more resilient economy and eroding human
may occur if peace negotiations in Ukraine fail to reach capital where it is most needed. If a lack of financial
a lasting resolution. support were suddenly to materialize, living and health
Rising long-term interest rates: Further pressure on conditions would deteriorate in low-income and fragile
already-high US bond yields, coupled with persistent countries, which might face social unrest and be forced
exchange rate volatility driven by additional policy to rely on public financing, further exacerbating their
shifts and sustained policy uncertainty, could also trig- debt vulnerabilities. The macroeconomic consequences
ger capital and FDI outflows from emerging market for aid-receiving countries might be substantial, includ-
and developing economies. The growing concentration ing worsening of current accounts, decline in foreign

20 International Monetary Fund | April 2025

 CHAPTER 1 GLOBAL PROSPECTS AND POLICIES

Figure 1.22. Number and Costs of Natural Disasters Next-generation trade agreements: Continued elevated
trade policy uncertainty could spark new momentum
Floods Storms
Wildfires Extreme temperatures
toward regional, plurilateral, and multilateral agree-
Droughts ments, which could mitigate risks and foster policy
predictability. Nondiscriminatory agreements that
500 1. Number of Natural Disasters
(Number of incidents, three-year moving average)
cover a broad set of areas, including digital and services
400
trade and investment, could facilitate broad-based
gains without introducing new distortions. Ultimately,
300 expanding and deepening international cooperation
and regional integration (for example, the EU’s single
200
market) could increase investment, boost productivity,
100
raise potential growth, and enhance countries’ resil-
ience to external shocks, by expanding the reference
0 market and diversifying trading partners (Albrizio and
2000 02 04 06 08 10 12 14 16 18 20 22 24
others 2025).
400 2. Costs of Natural Disasters Mitigation of conflicts: A resolution or mitigation
(Billions of US dollars, CPI adjusted) of ongoing conflicts could lead to a decrease in global
300 commodity prices and reallocate resources for produc-
tive uses. The economic impact of war can be substan-
200 tial, with studies showing that the “war tax” on growth
can reach 30 percent of GDP, contributing to inflation
100
rates as high as 15 percent (Federle and others 2024),
with neighboring countries most affected on average.
Cessation of hostilities, along with subsequent recon-
0
2000 02 04 06 08 10 12 14 16 18 20 22 24 struction efforts, would not only boost GDP growth
in countries directly involved in conflicts but would
Sources: EM-DAT: The International Disaster Database; and IMF staff calculations.
also have a positive influence on neighboring nations.
Note: Panel 1 is a stacked-area figure in which the values for each disaster type are
cumulatively added to show their combined total over time. CPI =consumer price This influence could manifest itself through the
index. alleviation of negative spillovers, which are estimated
to be on average between 5 percent and 10 percent of
reserves, pressure on exchange rates and prices, and GDP over the five to seven years following the onset
lower consumption and investment. of conflict (see Chapter 2 of the April 2024 Regional
Labor supply gaps: Many nations have relied on Economic Outlook: Middle East and Central Asia),
foreign workers to address labor shortages, particularly and through the generation of positive spillovers.
following COVID-19. While a retrenchment of for- For instance, a ceasefire in Ukraine has the potential
eign-worker flows to advanced economies might ease to raise growth in the region, through a rebound in
strains on local services and infrastructure and provide consumer confidence and reduction in energy prices,
a small boost to incomes, output would decline in especially in Europe. However, countries that have
recipient countries—and globally—in the long term invested in alternative infrastructures or energy sources
(see Chapter 3). The resulting decline in labor supply to manage conflict-related shortages may experience
may pose fiscal sustainability risks and hinder potential negative spillovers for some time if reversals prevent
growth, especially in countries where legal immigrants them from achieving the expected returns.
tend to be well integrated and their skills meet and Structural reform momentum: A generalized acceler-
complement labor market needs. ation of structural reforms, partly reinforced by peer
benchmarking among nations and challenging global
macroeconomic conditions, could significantly boost
Upside Risks growth. Streamlining regulations and reducing red tape
Despite the increased prevalence of negative risks, would unlock market entry and increase competition,
some factors could lead to more favorable outcomes enhancing business dynamism and resource realloca-
than those in the reference forecast. tion (as Box 1.1 illustrates for the case of China). More

International Monetary Fund | April 2025 21

WORLD ECONOMIC OUTLOOK: A Critical Juncture amid Polic y Shifts

integrated financial, labor, and product markets could medium term, it remains urgent to deliver on struc-
provide the depth and scale to drive more innovation tural reforms, while prudently harnessing the benefits
and accelerate productivity growth. In Europe, tackling of technological advances.
remaining internal barriers would allow firms to scale
up. Accelerating European integration by reducing reg-
ulatory obstacles and strengthening the Capital Mar- Managing Trade Tensions and Prolonged
kets Union could increase investment, lift productivity, Elevated Trade Policy Uncertainty
and raise potential growth. Such an approach would Delivering a stable and predictable trade environment:
bolster the underdeveloped European capital market, Countries should work constructively to urgently
contributing to a reduction of global imbalances. resolve trade tensions and promote clear and trans-
Growth engine powered by artificial intelligence (AI): parent trade policies to stabilize expectations, avoid
Optimism about AI, coupled with an expected signif- investment distortions, and reduce volatility while
icant annual reduction in AI usage costs and future avoiding steps that could further harm the world econ-
technological advancements, could boost productivity omy (Georgieva 2025). In the wake of greater trade
and consumption significantly. The integration of AI policy uncertainty, pragmatic cooperation and deeper
technologies could lead to knowledge spillovers across economic integration (Rotunno and Ruta, forthcom-
industries and regions, fostering innovation and driv- ing) can help countries expand trade either through
ing down costs globally. These gains could materialize nondiscriminatory unilateral reductions of trade
without significant adverse effects on employment if barriers or at the regional, plurilateral, or multilateral
AI adoption is accompanied with policies that upgrade level, as free trade agreements (accession of the United
regulatory frameworks and support labor reallocation Kingdom to the Comprehensive and Progressive Agree-
(Cazzaniga and others 2024). They could also mate- ment for Trans-Pacific Partnership and the EU–New
rialize without escalating electricity prices and envi- Zealand trade agreement) have shown. Greater regional
ronmental costs if policymakers, in collaboration with integration, such as that involved in deepening the
businesses, seize the opportunity by embracing and EU single market (October 2024 Regional Economic
incentivizing renewable energy sources and innovative Outlook: Europe) or continuing efforts toward African
production paradigms (see the Commodity Special Continental Free Trade Area implementation (El
Feature). Ganainy and others 2023) can similarly enhance global
efficiency even in the presence of distortionary trade
policies.
Policies: Navigating Uncertainty and Broad subsidies generate large fiscal costs and
Enhancing Preparedness to Ease additional distortions and are thus not a well-suited
Macroeconomic Trade-Offs tool for countering domestic or external distortions.
The global economy is at a critical juncture, with However, in specific cases, targeted industrial policies
substantial policy pivots and uncertainty. A range of can alleviate sectoral market failures as a result of exter-
plausible alternatives are possible, shaped by rapidly nalities or economies of scale. Yet industrial policies
changing trade policies. In the face of ongoing are costly and can lead to various forms of government
structural shifts, heightened uncertainty, and per- failures, in turn leading to misallocation of resources
sistently weak growth, policies should focus on steps (Ilyina, Pazarbasioglu, and Ruta 2024). Poorly targeted
to restore confidence and stability, reduce imbalances, industrial policies can drive production away from
and sustainably lift growth. Reducing policy-induced underlying patterns of comparative advantage, create
uncertainty and resolving trade tensions can promote regional or global oversupply, and result in changes in
a more stable environment, bolster consumption, and terms of trade that reduce domestic welfare (Hodge
facilitate investment. In the short term, countries need and others 2024). Amid limited fiscal space, industrial
to calibrate monetary and prudential policies carefully policy programs should be subjected to a comprehen-
to maintain price and financial stability. Gradually sive cost-benefit analysis. To minimize distortions,
rebuilding fiscal space remains critical for managing industrial policies should be targeted narrowly to
increased public spending needs and building suffi- specific objectives in sectors in which externalities or
cient buffers to address future shocks, which could be market failures are well identified. Finally, coopera-
sizable and recurrent. To uplift growth prospects in the tion regarding industrial policy approaches among

22 International Monetary Fund | April 2025

 CHAPTER 1 GLOBAL PROSPECTS AND POLICIES

international trading partners can reduce negative target, maintaining a constant level of nominal policy
spillovers (Brandão-Marques and Toprak 2024). rates will, over time, result in a restrictive real policy
Preserve international cooperation. International stance as inflation declines while growth weakens. In
cooperation, including cooperation through regional these circumstances, gradual reductions in the policy
and cross-regional groups, is essential to sustain global rate to move the policy stance closer to the neutral
growth, tackle common problems, and mitigate rate are appropriate. Overall, in the face of elevated
cross-country spillovers. In several policy areas, includ- uncertainty, there is a premium on clear communica-
ing trade, industrial policy, international taxation, tion, which can enhance predictability for all eco-
climate, and development and humanitarian assistance, nomic agents.
international cooperation and platforms can mitigate Elevated uncertainty also intensifies the trade-off
global spillovers and protect the vulnerable (Aiyar between anchoring inflation expectations and safe-
and others 2023). International tax cooperation can guarding financial stability. Where central banks’
diminish the effects of ongoing harmful tax compe- efforts to stabilize inflation expectations lead to a
tition by preventing a race to the bottom in global tightening of financial conditions, this may exacerbate
corporate taxes. In low-income countries, multilat- vulnerabilities within the financial system, complicat-
eral assistance will become even more important for ing operations for financial institutions (Bergant and
addressing budget and development needs if bilateral others 2025). Therefore, it is crucial to strike a balance
foreign aid flows decline. between maintaining stable inflation expectations and
ensuring that financial stability is not compromised,
particularly amid financial market volatility.
Maintaining Price and Financial Stability Mitigate disruptive foreign exchange volatility. Per-
Calibrate monetary policy amid two-sided risks. As sistent trade policy uncertainty, broader policy shifts,
countries are experiencing a multifaceted combination cross-country divergence in paths to monetary policy
of shocks, central banks need to carefully calibrate normalization, and a more volatile currency outlook
monetary policy to country-specific circumstances. could further amplify recent bouts of financial market
Trade policy shocks adversely weigh on supply while volatility. This could trigger disruptive capital outflows,
persistent uncertainty and negative wealth effects which would particularly affect countries with higher
from the April 2025 asset price correction dampen import dependence or a greater share of dollar-invoiced
aggregate demand. As these shocks unfold, central imports. The IMF’s Integrated Policy Framework pro-
banks should monitor the interplay of sectoral supply vides guidance tailored to country-specific conditions
pressures and sectoral demand, because a steepening of on appropriate policy responses.
sectoral supply curves could trigger renewed infla- In countries with well-functioning and deep foreign
tionary pressures (see Chapter 2 of the October 2024 exchange markets and low levels of foreign-currency
WEO). Where near-term inflation risks are tilted to debt, exchange rate flexibility and raising policy rates
the upside or inflation expectations are rising, future are advisable. Financial market policies, including
cuts to the policy rate should remain contingent on rapid, decisive, and well-designed liquidity support, are
evidence that inflation is heading decisively back suitable tools for mitigating bouts of foreign exchange
toward target. This can ensure inflation expectations market volatility that emanate from trade partners’ pol-
remain anchored while guarding against the risk of icies or from US dollar movements. At the same time,
premature monetary policy easing followed by later for countries with shallow foreign exchange markets or
rate hikes. Without price stability, any gains from sizable amounts of foreign-currency-denominated debt,
future growth are at risk of being more than offset by an abrupt tightening of global financial conditions may
a renewed cost-of-living squeeze. Central banks need trigger disruptive foreign exchange volatility and rising
to be particularly vigilant regarding those risks after risk premiums, which could pose risks to macrofinan-
the recent period of prolonged inflation and should cial stability. In these circumstances, while maintaining
be ready to act forcefully, because inflation expecta- suitable monetary and fiscal policies, temporary foreign
tions may be much less stable in instances of renewed exchange interventions or capital flow management
inflationary pressures. If growth is declining or labor measures could be appropriate. These should be com-
markets are softening while inflationary pressures and plemented with macroprudential measures to mitigate
inflation expectations are clearly returning toward disruptions from large foreign-currency-denominated

International Monetary Fund | April 2025 23

WORLD ECONOMIC OUTLOOK: A Critical Juncture amid Polic y Shifts

debt holdings and financial market reforms to deepen and temporary and with clear sunset clauses—should
domestic capital markets over the medium term. be deployed only for households, firms, or industries
Safeguard financial stability through prudential policy. affected by severe trade dislocations.
High uncertainty about the economic outlook and Devise adjustment plans to restore fiscal sustainability.
financial market volatility puts a premium on robust For many countries, current fiscal policies fall short of
prudential policies to safeguard financial stability. Juris- what is needed to ensure that debt has a high proba-
dictions experiencing financial market stress should bility of stabilizing (Chapter 1 of the April 2025 Fiscal
release available macroprudential buffers to support the Monitor). A credible fiscal adjustment plan would
provision of credit to the economy and avoid a broad be grounded in realistic assumptions about growth,
tightening of financial conditions and cascades of debt-servicing costs, revenue mobilization, and spend-
business failures and bankruptcies. Should stress levels ing needs. For countries where new spending needs
reach crisis proportions, authorities should be ready to arise, demonstrating a clear commitment to safeguard-
deploy liquidity and fiscal instruments to avoid exces- ing debt sustainability, the integrity of fiscal rules,
sive deleveraging and damage to the real sector. Where and fiscal policy transparency are crucial. In countries
regulatory changes are being implemented, financial with fiscal space, net expenditures, excluding defense
stability policies—including macroprudential poli- investment, should remain bound to already-agreed-
cies and Basel III reforms—should be maintained to upon commitments. In economies with limited fiscal
strengthen the supervision of financial institutions and space, both permanent and temporary increases in
the monitoring of financial stability risks. Enhancing fiscal outlays should be financed by fiscal revenues and
reporting requirements and strengthening policies to spending reprioritization.
mitigate vulnerabilities in nonbank financial institu- The strengthening of medium-term fiscal frame-
tions are crucial for reaping the benefits of the latter’s works and fiscal rules can support fiscal adjustment
role in financial intermediation. plans, as can greater fiscal transparency, including that
in regard to contingent liabilities and debt-creating
flows outside the fiscal deficit. Binding legislation and
Rebuilding Fiscal Buffers to Regain Budgetary clear contingencies on how governments will respond
Maneuver Space to unexpected changes in economic conditions—
Restoring fiscal space and putting public debt on changes in growth, interest rates, or spending
a sustainable path, while meeting important spend- needs—under realistic assumptions can further bolster
ing needs to ensure national and economic security, credibility.
remains a priority. This requires credible medium-term For countries in or at high risk of debt distress or
fiscal consolidation with decisive yet growth-friendly facing potential noncompliance with fiscal regulations,
adjustments. Greater fiscal discipline would also help achieving fiscal sustainability may require not only
contain borrowing costs and thus provide a guardrail fiscal consolidation, but also debt restructuring. Fur-
against the risk of high or higher interest rates amid thermore, progress in the implementation of interna-
higher term premiums and upside risks to inflation tional sovereign debt resolution frameworks, including
in some countries. Fiscal adjustment plans should the Group of Twenty (G20) Common Framework,
focus primarily on credibly rebuilding buffers to keep and increased consensus at the Global Sovereign Debt
financing costs reasonable, help anchor medium-term Roundtable (GSDR), will make debt restructuring
inflation expectations, and contain risks relating to sov- (when necessary) less costly.
ereign rating downgrades. Moreover, countries should Enact targeted fiscal reforms. Careful design and
reprioritize expenditures and boost fiscal revenues, composition of fiscal adjustment plans can prevent
including by broadening their tax bases; permanent prolonged negative growth effects, with specific
increases in spending should be financed with reve- policy mixes requiring country-specific calibration.
nues, and a greater focus on enhancing public sector In advanced economies, expenditure reprioritization,
spending efficiency may be warranted, particularly if entitlement reforms, and revenue increases through
fiscal space is constrained. Where negative demand indirect taxes or removal of inefficient incentives,
shocks from recent tariffs and trade policies are large, depending on countries’ circumstances, can support
automatic stabilizers can dampen their impact. New fiscal adjustment (April 2025 Fiscal Monitor). Emerg-
discretionary measures—designed to be well targeted ing market and developing economies have greater

24 International Monetary Fund | April 2025

 CHAPTER 1 GLOBAL PROSPECTS AND POLICIES

space to strengthen domestic revenue mobilization, standards and ease macroeconomic trade-offs. Higher
needed to meet spending needs and boost job creation. growth would support debt sustainability dynam-
Measures include broadening tax bases, by reducing ics, thus increasing fiscal space in the medium term.
informality as well as taking other measures, and Broad-based structural reforms can contribute to rais-
enhancing revenue administration capacity. Across ing growth potential, and multilateral cooperation can
countries, there is scope for reducing inefficient sub- support resilience in the wake of elevated uncertainty.
sidies. Gradual reforms, announced and implemented Enact structural reforms. Durable structural reforms
during more favorable macroeconomic conditions and across several areas, including labor markets, education,
combined with redistribution policies, can enhance regulation and competition, and financial sector poli-
public support for major expenditure reform in cies, can jointly lift productivity and potential growth
areas such as energy subsidies and pension reform and support job creation. In addition, technological
(Chapter 2 of the April 2025 Fiscal Monitor). progress, including that related to digitalization and
Protect growth and the vulnerable. Fiscal adjust- AI, can enhance productivity and potential growth.
ments need to be carefully calibrated to avoid negative Increasing female labor force participation can
impacts on potential growth and mitigate distribu- increase labor supply. Amid continued but uneven
tional impacts. Growth-friendly elements of spending, population aging in both advanced economies and
such as high-quality public investments in infrastruc- emerging market and developing economies, policies
ture and digitalization, can lift medium-term growth to improve human capital and the labor outcomes
potential and should be protected. Spending on of older workers, including health policies and those
growth priorities can be complemented with structural pertaining to continued training and development, can
reforms to labor markets and regulation. Protecting improve those workers’ labor market attachment and
the poor and the vulnerable can further cushion the productivity (Chapter 2). A well-designed mix of labor
impact on inequality and enhance social acceptability market interventions can also contribute to gradually
of fiscal reforms. Eliminating poorly targeted subsidies raising the effective retirement age. In addition to
such as those for energy can simultaneously reduce domestic labor market policies, evidence suggests that
distributional impacts and contribute toward achieving increased migration flows can attenuate challenging
climate-related objectives. demographic outlooks while mildly boosting growth
Use timely, targeted, temporary support where essen- (Chapter 3). This requires facilitating the swift labor
tial, in a responsible way. For countries where negative market integration of migrants (Caselli and others
demand shocks are large, automatic stabilizers should 2024) and ensuring that skills are well matched with
play their role in dampening the shocks’ impact. job opportunities (Beltran Saavedra and others 2024).
Where large shocks and severe trade dislocations have Measures to attenuate the distributional impacts of
a serious negative impact on households, firms, or labor market reforms, as well as governance reforms,
sectors, additional targeted and temporary support can further strengthen trust in public institutions (see
could be deployed. Such measures need to be appro- Chapter 3 of the October 2024 WEO). Robust regu-
priately designed to ensure proper targeting, include latory frameworks coupled with investments in digital
automatic sunset clauses to avoid entrenched support infrastructure and a digitally competent workforce
that prevents adjustment and reallocation, and mitigate are critical to ensure gains from new technologies are
fiscal and political economy risks. Responsibly adjust- broadly shared across the workforce (Georgieva 2024).
ing the fiscal envelope to support such new support, Targeted deregulation can ease constraints hindering
based on country-specific fiscal space consideration, firms from stimulating entrepreneurship, investment,
is critical to ensuring that public debt remains on a and innovation, thus ultimately boosting medium-term
sustainable path. growth potential. Estimates suggest sizable distortions
and real GDP costs averaging 0.8 percent of annual
GDP for a set of European countries (Pellegrino and
Reinvigorating Medium-Term Growth Zheng 2024). Maintaining prudential regulations
Potential growth remains subdued and cost-of-living and safeguarding financial stability remain key when
pressures persist in the aftermath of the pandemic. reducing bureaucracy. Premature or uncoordinated
Lifting medium-term growth prospects is the only sus- deregulation would increase financial stability risks and
tainable way to achieve a broad-based increase in living could fuel dangerous boom-bust dynamics.

International Monetary Fund | April 2025 25

WORLD ECONOMIC OUTLOOK: A Critical Juncture amid Polic y Shifts

Labor market and regulatory reform should be with efforts to strengthen public understanding of
complemented with policies to alleviate financial con- reform proposals and continued stakeholder engage-
straints. Increasing financial accessibility and reducing ment throughout the reform process (see Chapter 3 of
financial barriers to efficient capital allocation could the October 2024 World Economic Outlook; Chapter 2
further boost productivity growth (see Chapter 3 of the April 2025 Fiscal Monitor).
of the April 2024 WEO). Removing internal trade Make progress on climate policies. Addressing climate
barriers and advancing capital market reforms are change requires a well-designed policy mix that can
critical for business dynamism, notably that among generate macroeconomic benefits, including low-car-
innovation-intensive firms that lack tangible collateral bon, resilient growth. This includes investments in
(see Note One of the October 2024 Regional Economic renewable and energy-efficient technologies and econo-
Outlook: Europe). my-wide measures such as carbon pricing, which can be
Although structural reforms have been well identi- complemented by fiscal incentives, technical assis-
fied for several years, securing broad social acceptability tance, and financial support for adaptation projects in
for such reforms has often been a significant obstacle. low-income countries. Many countries are transitioning
To increase the likelihood structural reforms will suc- from fossil fuels to renewables, which can help improve
ceed and to enhance the social acceptability of reform energy security (Dolphin and others 2024), benefit
agendas, participative processes are needed, coupled employment, and reduce balance of payments risks.

26 International Monetary Fund | April 2025

 CHAPTER 1 GLOBAL PROSPECTS AND POLICIES

Box 1.1. Risk Assessment Surrounding the Reference Forecast

This box presents two complementary assessments Figure 1.1.1. Forecast Uncertainty around
of risks to the global economy. First, it uses the IMF’s Global Growth and Inflation Projections
Group of Twenty (G20) model to derive confidence (Percent)
bands around the World Economic Outlook (WEO)
reference forecast. Second, based on the IMF’s Global WEO reference forecast
Integrated Monetary and Fiscal (GIMF) model, it sim- 6 1. US GDP Growth
ulates two scenarios. Policies and shocks in scenario A 5
result in a widening in global imbalances and a fall in 4
3
global output relative to those in the reference forecast; 2
policies in scenario B result instead in a narrowing of 1
global imbalances and an increase in global output 0
−1
relative to those in the reference forecast.
−2
−3
Confidence Bands 2024 25 26 27 28 29 30
The first assessment identifies the economic shocks 9 2. US Headline Inflation
underlying historical data using the G20 model. It 8
7
then resamples these shocks and feeds them back 6
through the model to generate risk distributions 5
4
(Andrle and Hunt 2020). The procedure has been 3
2
adjusted to align with the growth-at-risk assessment 1
presented in the April 2025 Global Financial Stability 0
−1
Report (GFSR). As in the previous assessment in the −2
October 2024 WEO, growth distributions are skewed 2024 25 26 27 28 29 30
to the downside, and inflation distributions are some- 6 3. Global GDP Growth
what skewed to the upside.1 5
Panels 1 and 2 in Figure 1.1.1 show the distribu- 4
3
tions for US growth and headline inflation, respec-
2
tively (90 percent confidence bands represented in 1
the blue-shaded areas). The probability of a recession 0
occurring in 2025 is now assessed at 37 percent, −1
higher than in the October 2024 WEO.2 Risks have −2
2024 25 26 27 28 29 30
moved farther to the upside for US inflation and
policy rates (not shown), in part reflecting the upward 9 4. Global Headline Inflation
8
revision to projected inflation in the WEO reference 7
6
5
The authors of this box are Michal Andrle, Jared Bebee, 4
Domenico Giannone, Chris Jackson, Dirk Muir, Rafael Portillo, 3
and Philippe Wingender. 2
1Aligning with the growth-at-risk assessment requires sampling 1
0
some recession years more often: 1969, 1974–75, 1981, and to a −1
lesser extent 2009 and 2020. 2024 25 26 27 28 29 30
2The recession risk for 2025 is defined as the probability that

2025 annual growth will be below 1.2 percent, consistent with a Source: IMF staff estimates.
shallow recession starting in the third quarter. The probability of Note: Each shade of blue represents a 5 percentage point
a short-lived US recession in 2025, according to this criterion, probability interval. WEO = World Economic Outlook.
was assessed to be about 25 percent at the time of the October
2024 World Economic Outlook (WEO).

International Monetary Fund | April 2025 27

WORLD ECONOMIC OUTLOOK: A Critical Juncture amid Polic y Shifts

Box 1.1 (continued)

forecast. The risk that 2025 US headline inflation will reference forecast, starting in 2025. The decline is
rise above 3.5 percent is now more than 30 percent, concentrated in the tradables sector.
compared with 13 percent back in October; the prob- • Weaker domestic demand in China. Consumption
ability that the average 2025 three-month Treasury and investment fall relative to those in the reference
bill rate will rise above 4.5 percent for 2025 is about forecast by 0.7 and 0.5 percent, respectively, in 2025.
33 percent (up from 27 percent in October). The decline builds over 2026–27 and fades after that.
Panels 3 and 4 in Figure 1.1.1 show the distribu- Trade war. The scenario assumes a ratcheting up
tions for global growth and headline inflation. The of tariffs in response to the April 2 announcement.
probability that global growth in 2025 will fall below First, it incorporates an additional 50 percentage
2 percent is assessed at close to 30 percent, higher point increase in tariffs on all China-US trade in both
than the assessment done in October (17 percent). directions relative to the reference forecast in this
The probability that global headline inflation will report. Second, countries other than China respond
rise above 5 percent is estimated at about 31 percent, tit for tat to the April 2 announcement, raising tariffs
slightly lower than the corresponding estimate of on imports from the United States by the same rate.
34 percent at the time of the October WEO. Third, the United States responds by doubling the
rate announced on April 2 to all countries other
Scenarios than China. As a result, there is an increase of about
The GIMF model is next used to simulate two 18 percentage points in the effective tariff rate on both
scenarios. The version of the model used here has US goods imports and US goods exports, relative to
10 regions, including China, the United States, and the current reference forecast.
the euro area. Increase in global uncertainty. Uncertainty over
The scenarios assume monetary policy responds macroeconomic policies increases. The resulting shock is
endogenously, with floating exchange rates in most equivalent to a three-standard-deviation increase in the
regions. In scenario A, China’s currency is managed global economic policy uncertainty measure in Davis
relative to the dollar through capital flow measures, (2016), about 50 percent larger than the spike observed
allowing some exchange rate adjustment in response in 2018–19. Regions more directly exposed to tariff mea-
to shocks but by less than what would be implied by sures, or where trade represents a larger share of activity,
a fully floating regime; in scenario B, the renminbi experience a somewhat greater uncertainty shock.
adjusts as in a flexible exchange rate regime. On the Tighter financial conditions. The combination of
fiscal side, automatic stabilizers are allowed to operate. shocks in the scenario triggers a tightening in finan-
cial conditions. Asset prices decline globally in 2025,
Layers Considered in Scenario A with the largest decline in the US (about 5 percent on
Global divergences. The layer has three components: average for the year) and in emerging markets (about
• Renewal of the US Tax Cuts and Jobs Act (TCJA). 3 percent). Sovereign and corporate premiums in
Scenario A assumes renewal of a broad set of emerging markets excluding China increase by 50 basis
provisions in the TCJA for a period of 10 years, points; corporate premiums in advanced economies
including individual and business taxes, the child and China increase by 25 basis points. The tightening
tax credit, and expensing of investment, totaling in financial conditions lasts for two years.
about 11 percent of GDP over 2025–34. The
accompanying deficits are back-loaded, reaching Layers Considered in Scenario B
about 1.4 percent of GDP by 2027. Because the Lower US government debt. The United States
renewal comes after a historical inflation surge, the embarks on a series of fiscal reforms to reduce ineffi-
layer assumes a small additional temporary increase ciencies from poorly targeted tax expenditures, shift
in US inflation expectations. from labor to consumption taxes, and contain health
• Lower productivity in Europe. The recent slowdown care costs. In addition, government consumption is
in productivity growth in the euro area deepens as permanently reduced. These reforms, alongside savings
a result of lower innovation, technological shifts, from lower interest payments, lead to a gradual decline
and lack of access to equity funding. Total factor of the overall fiscal deficit, which reaches 1 percent of
productivity growth declines by 0.2 percentage GDP after five years. The US public debt declines by
point per year over five years, relative to that in the 25 percentage points of GDP in the long term.

28 International Monetary Fund | April 2025

 CHAPTER 1 GLOBAL PROSPECTS AND POLICIES

Box 1.1 (continued)

Higher public spending in Europe. Public invest- Figure 1.1.2. Impact of Scenario A on GDP
ment increases in the euro area starting in 2025. It (Percent deviation from reference forecast)
reaches 1 percent of GDP in additional spending
by 2026, stays at that level until 2030, and remains Global divergences
permanently higher by 0.4 percent after that to sustain Add trade war
Add global uncertainty
a higher stock of public capital.3 The latter raises Add tighter financial conditions
total factor productivity and potential output perma- 1.0 1. US
nently. The layer also includes a permanent increase 0.5
in defense spending of 0.3 percent of GDP, starting 0
in 2025. Over the WEO horizon, about two-thirds of −0.5
the surge in spending is financed by higher deficits. −1.0
From 2030 onward, however, the increase in public −1.5
−2.0
capital and defense spending is offset by a reallocation −2.5
of existing spending, such that debt ratios gradually 2024 26 28 30 Long
return to those in the reference forecast. term
Productivity gains and rebalancing in China. Struc- 1.0 2. Euro Area
tural reforms that reduce barriers to entry and reforms 0.5
to state-owned enterprises lead to increased market 0
−0.5
dynamism, and strengthening of the social safety net
−1.0
leads to demand-side rebalancing. Productivity in the −1.5
tradables and nontradables sectors increases by about 2 −2.0
and 0.5 percent, respectively, through 2030, boosting −2.5
2024 26 28 30 Long
sentiment in the short run. The saving rate decreases term
by 2 percentage points of GDP over the same period.
1.0 3. China
Impact on World Economy 0.5
0
Figures 1.1.2 and 1.1.3 present the effects, for sce- −0.5
narios A and B, on the level of GDP during 2024–30 −1.0
and in the long term, for China, the United States, −1.5
the euro area, and the world. Effects are presented −2.0
−2.5
as percent deviations from the reference forecast.4 2024 26 28 30 Long
Figure 1.1.4 shows the total effects of the scenarios term
on the current account balances of these three main 1.0 4. World
regions as deviations from the reference forecast in 0.5
percentage points of GDP. 0
−0.5
In scenario A, the global divergences layer is some-
−1.0
what stimulative for the US economy as a result of −1.5
the TCJA renewal. The impact is limited initially but −2.0
−2.5
2024 26 28 30 Long
3The scenario is similar to the scenario considered in the term
October WEO, but the increase in public investment is smaller
and the financing assumption is somewhat different. The October Source: IMF staff estimates.
scenario was implemented using a different model, the G20
Note: “Long term” is at least 50 years ahead.
model, leading to some differences in multipliers and spillovers.
4The impact on growth rates is approximated by subtracting

the effect on output from the previous year.

International Monetary Fund | April 2025 29

WORLD ECONOMIC OUTLOOK: A Critical Juncture amid Polic y Shifts

Box 1.1 (continued)

Figure 1.1.3. Impact of Scenario B on GDP Figure 1.1.4. Impact of Scenarios A and B on
(Percent deviation from reference forecast) Current Account in Percent of GDP
(Percentage point deviation from reference forecast;
US lower debt and tax reform solid = Scenario A, dashed = Scenario B)
Add EU public investment and defense
Add China productivity and sentiment 1.5
2.0 1. US US Euro area China
1.0
1.5
1.0 0.5
0.5
0
0
−0.5 −0.5
2024 26 28 30 Long
term −1.0
2.0 2. Euro Area
−1.5
1.5
1.0 −2.0
2024 25 26 27 28 29 30
0.5
0 Source: IMF staff estimates.
Note: Scenario A includes global divergences, trade war,
−0.5
2024 26 28 30 Long increases in global uncertainty, and tighter financial conditions.
term Scenario B includes lower debt and tax reform in the US, higher
public spending in the European Union, and productivity gains
2.5 3. China and rebalancing in China.
2.0
1.5
builds over time. Over 2025–26, the layer adds 20–30
1.0
basis points to US headline inflation and 30 basis
0.5
points to the US policy rate and results in a modest
0
appreciation of the dollar. Lower productivity in Europe
−0.5
2024 26 28 30 Long reduces euro area activity gradually. The component
term lowers GDP by about 0.3 and 0.5 percent in 2025
2.0 4. World and 2026. As demand falls in lockstep with poten-
tial, the impact on the region’s inflation and policy
1.5
rates is close to zero. Lower domestic demand in China
1.0
subtracts 0.3 and 0.5 percent from China’s reference
0.5 forecast GDP in 2025 and 2026, respectively, with
0 the decreases reflecting mainly lower consumption.
−0.5 The component reduces China’s headline inflation by
2024 26 28 30 Long an additional 20–30 basis points in 2025–26, with
term
the effects amplified by limited adjustment of the
Source: IMF staff estimates.
renminbi-to-dollar exchange rate.
Note: “Long term” is at least 50 years ahead. EU = European
The trade war layer reduces global demand,
Union. especially for US and Chinese goods. Differences in
US tariff rates across countries create scope for trade

30 International Monetary Fund | April 2025

 CHAPTER 1 GLOBAL PROSPECTS AND POLICIES

Box 1.1 (continued)

diversion, and some regions benefit slightly in the reference forecast) and increases in China and the rest
short run, for example, the euro area. The effect is of the world.
short-lived: As relative prices and sectoral demand In scenario B, the lower US government debt layer
adjust, the impact on activity becomes uniformly reduces US debt by 25 percent of GDP over the long
negative across countries. The effect builds over time term, increasing fiscal sustainability. US fiscal reforms
as tariffs weigh on capital accumulation. Tariffs reduce have a positive short-run effect on US activity, with
world GDP by 0.6 percent by 2027 and by 1 percent GDP increasing by 0.2 percent in 2025–26. Inflation
in the long term. There is a small increase in global net of tax effects is slightly higher than that in the
inflation of about 10 basis points in 2025–26, as reference forecast, as are policy rates. The reduction in
the direct effect from higher tariffs is offset by the US public debt leads to a gradual decline in US and
disinflationary effect from reduced activity.5 Inflation global real interest rates, which decrease by 10 basis
falls below the reference forecast after that, including points in the long run. Beyond the WEO horizon,
inflation in the United States. the long-run effect is positive for both US and world
The increase in global uncertainty layer reduces GDP, by 0.4 and 0.2 percent relative to the reference
global investment by close to 2 percent in 2025 and forecast, respectively. The United States also experi-
3 percent in 2026, relative to the reference forecast. ences an increase in its current account balance (lower
Global consumption also decreases over 2025–27. deficits than in the reference forecast).
The overall impact on global output from this layer is The higher public spending in Europe layer pro-
closer to –0.5 percent of that in reference forecast in vides a sizable boost to the euro area, raising GDP
2025 and –0.8 percent in 2026. The layer contributes by up to 1.3 percent by 2026, relative to that in the
a moderate decrease in global inflation and policy reference forecast. Inflation increases by more than
rates of close to 20 basis points by 2026. The tighter 20 basis points over the WEO horizon, with the euro
financial conditions layer subtracts 0.5 percent from area policy rate increasing by about 50 basis points.
global GDP in 2025, with all regions being affected, The current account balance decreases (lower surplus
from both the domestic tightening and international than in the reference forecast). The buildup in public
spillovers. capital raises productivity and potential output in the
The combined effect of the layers in scenario A is a euro area permanently. Spillovers to other regions are
decrease in global GDP of about 1.3 percent by 2025 positive but small.
and 1.9 percent by 2026, relative to the reference The productivity gains and rebalancing in China
forecast. All regions see a sizable decline in activity layer raises that country’s GDP by about 1 percent by
over the WEO horizon and in the long term, with the 2026, relative to that in the reference forecast; about
long-term impact reflecting tariff distortions and lower one-third of the increase is the result of improved
productivity. The decrease in global activity is disinfla- sentiment. The reduction in the saving rate adds to
tionary, with global headline inflation and policy rates domestic demand, and potential output increases
falling by close to 40 basis points by 2027. Inflation gradually to 2 percent above the current reference
and policy rates are initially flat in the United States forecast, with a positive net effect on inflation that
but fall below those in the reference forecast after reaches about 20 basis points by 2030. China’s current
2026. The current account balance decreases in the account decreases considerably (lower surplus relative
United States (the deficit worsens relative to the to that in the reference forecast).
Finally, the combined effect of the layers in scenario
5The effect of tariffs on inflation is uncertain, as explained B is an increase in global output of about 0.4 percent
in Box 1.2. The effect depends on responses of exchange rates, by 2026 (0.8 percent in the long term) and an increase
wages, and firms’ markups. in global inflation of about 15 basis points.

International Monetary Fund | April 2025 31

WORLD ECONOMIC OUTLOOK: A Critical Juncture amid Polic y Shifts

Box 1.2. The Global Effects of Recent Trade Policy Actions: Insights from Multiple Models
This box analyzes the macroeconomic implica- to respond with one-to-one tariffs on imports of
tions of recent tariff announcements included in the US autos. In response to the April 2 tariffs, China
World Economic Outlook (WEO) reference forecast increases tariffs on all US imports by 34 percentage
and provides a range of possible outcomes regarding points, in addition to earlier targeted measures aimed
their macroeconomic impact. The effects of tariffs are at some energy, transport, and agricultural goods.
complex, operating through different channels that Overall, the countermeasures amount to an effective
may not be sufficiently captured by a single model. The tariff rate increase of about 5 percentage points on
analysis here draws on three models: the IMF’s Global total US goods exports.
Integrated Monetary and Fiscal (GIMF) model and The models. GIMF is a global dynamic model fea-
two trade models based on Caliendo and Parro (2015; turing capital accumulation, numerous rigidities, three
hereafter “CP”) and Caliendo, Feenstra, Romalis, and sectors, and global value chains. The version of GIMF
Taylor (2023; hereafter “CFRT”).1 The impacts on employed here has eight countries. CP and CFRT are
global activity are negative and larger for countries expe- static models with rich country and sectoral structures
riencing higher tariff increases or more directly exposed. (160 countries and 12 sectors in the specification of
The effects on inflation, and to some extent exchange CP used here, 60 and 17, respectively, in this specifi-
rates, are uncertain and depend on various factors. This cation of CFRT) and detailed input-output linkages.
assessment for activity should be considered a lower CP assumes constant returns to scale, whereas CFRT
bound. The impact on inflation could also be greater features heterogeneous firms with increasing returns to
than expected. Notably, further escalation of trade mea- scale determining whether to produce and export.
sures beyond those discussed in this box and prolonged
uncertainty about future tariffs amplify the negative Short-Term Effects
macroeconomic effects but are not considered here.2 GIMF is used to assess the short-term dynamics
(one to three years).
Tariff Announcements Included in the Assumptions. Endogenous monetary policy responses
Model-Based Assessment are assumed, with fully floating exchange rates in
The box considers the set of tariff measures that were Canada, the euro area, Mexico, the United States,
implemented between February 1 and April 4, 2025. and other regions. The yuan-to-dollar exchange rate is
These include unilateral tariff increases by the United assumed to be managed through capital flow mea-
States. Some are country and region specific, such as sures, which allows some exchange rate adjustment in
the April 2 tariffs levied in proportion to partners’ China but by less than what would be implied by a
bilateral trade surpluses, with a minimum rate increase fully floating regime. Tariff revenues are used to reduce
of 10 percent. Other tariff increases are on specific debt over the first 30 years; in the long term they are
goods and commodities, such as steel and aluminum rebated to households.
and auto and auto parts. The combined measures Along with the standard specification of GIMF, the
increase the effective overall tariff rate in the United short-term analysis considers two additional speci-
States by about 25 percentage points, ranging from fications (“versions”) that vary along the following
an average increase of about 15 percentage points for dimensions:
Canada, the euro area, and Mexico to 27 percentage • US dollar invoicing of global trade. In the first spec-
points for an aggregate of Asian countries excluding ification, exporters charge for their wares in local
China and more than 50 percentage points for China. currency. An alternative version assumes instead that
Tariff responses by US trading partners are also about half of global trade is denominated in dollars.
included here. Canada places a 25 percent tariff on This assumption leads to inflationary pressures in
40 percent of imports of US goods. It is also assumed other countries when the US dollar appreciates.
• US inflation. The initial assumption is that tariffs
The authors of this box are Diego Cerdeiro, Rui Mano, Dirk are perceived as permanent (resulting in a large
Muir, Rafael Portillo, Diego Rodriguez, Lorenzo Rotunno, appreciation of the dollar) and that US firms partly
Michele Ruta, Elizabeth Van Heuvelen, and Philippe Wingender. absorb the resulting increase in import costs through
1A similar comparison was featured in Box 4.4 of the April
lower margins. In this alternative version, tariffs are
2019 World Economic Outlook, at the time of previous tariff hikes
by China and the United States. expected to be removed after several years (limiting
2Box 1.1 analyzes the role of heightened policy uncertainty. dollar appreciation), and US firms are assumed to

32 International Monetary Fund | April 2025

 CHAPTER 1 GLOBAL PROSPECTS AND POLICIES

Box 1.2 (continued)

fully pass higher import costs through to consumers. Figure 1.2.1. Short-Run Effects of Tariffs
Both assumptions cause the tariff increases to result (Percent deviation from a forecast with no tariffs)
in higher inflationary pressures in the United States.
Figure 1.2.1 shows the impact across the three ver- All tariffs
Temporary tariffs, higher pass-through
sions of GIMF (the standard specification plus the two Dollar invoicing for GVCs
alternative versions) for bilateral real exchange rates
with respect to the United States, for inflation, and 2 1. Bilateral US-Dollar Exchange Rate
for GDP. Results are shown in deviations from a no-­ 0
tariff baseline for the world, the United States, China, −2
Canada and Mexico combined (CMX in the figure), −4
the euro area, and other Asian countries.
−6
Currencies. Higher tariffs lead to a depreciation of
−8
currencies with respect to the dollar (Figure 1.2.1,
panel 1). The euro area and Other Asia experience −10
CHN CMX Euro area Other Asia
the largest depreciations. The yuan depreciates by
less relative to others on account of the exchange rate 0.6 2. Headline Consumer Price Inflation
management assumption. Exchange rate movements 0.4
are considerably smaller if tariff increases are perceived 0.2
as temporary, about one-third the size relative to the 0
version of the model in which tariffs are perceived as −0.2
permanent. −0.4
Inflation. The impact on inflation is uncertain −0.6
(Figure 1.2.1, panel 2). In the first version, the effect is −0.8
USA CHN CMX Euro area Other Asia
limited, except in China, which experiences a decrease
of about 60 basis points in 2026 because of the man- 0.5 3. Real Gross Domestic Product
aged exchange rate. Inflationary effects in the United
0
States are offset by the appreciation of the dollar and
some decline in markups. When tariffs are perceived −0.5
to be temporary and import costs are fully passed on, −1.0
US inflation increases by close to 50 basis points in
−1.5
2025. The impact on inflation outside the United
States is instead larger if the dollar plays a central role −2.0
World USA CHN CMX Euro Other
in the pricing of global trade, as the appreciation of area Asia
the dollar raises production costs globally.
Activity. Tariffs have a large negative impact on Source: IMF staff estimates.
global activity. The effect is largest for Canada and Note: The figure shows results from tariff simulations using the
Mexico, China, and the United States (Figure 1.2.1, IMF’s Global Integrated Monetary and Fiscal (GIMF) model for
the first three years by country. The blue lines show the effects
panel 3). The impact on China also reflects a less-than- of tariffs under standard assumptions. The red lines show the
full adjustment of the exchange rate. The negative effects of temporary tariffs and higher pass-through. The yellow
impact on the United States is amplified in the version lines show the effects when about 50 percent of global trade is
invoiced in US dollars. Data labels in the figure use International
of GIMF in which tariffs are perceived to be tempo- Organization for Standardization (ISO) country codes. “Other
rary and import costs are fully passed on, because the Asia” includes BGD, BRN, IDN, IND, KHM, LAO, MMR, MYS, PHL,
resulting increase in inflation leads to a tightening of SGP, THA, and VNM. CMX = Canada and Mexico; GVCs = global
value chains.
monetary policy. The euro area and Other Asia benefit
slightly in the short run from trade diversion, but

International Monetary Fund | April 2025 33

WORLD ECONOMIC OUTLOOK: A Critical Juncture amid Polic y Shifts

Box 1.2 (continued)

the effect depends on the currency used for invoicing two trade models, despite each model emphasizing
global trade. Under dollar invoicing, the appreciation different channels.
of the dollar weighs on global external demand, and Output. Tariffs generate global long-term out-
other regions experience large losses as well. The world put losses across all models (Table 1.2.1, panel 2).
economy sees a negative hit to activity that ranges Canada and Mexico, China, and the United States
between 0.4 and 1 percent of world GDP by 2027. are the most affected. The negative impact on the
US is similar across GIMF (which captures well
Medium- to Long-Term Effects changes in the capital stock) and CFRT (which
All three models (GIMF, CP, and CFRT) are used captures productivity losses due to misallocation). In
to assess medium- to long-term impact (10 years), GIMF, lower levels of capital accumulation weaken
under the assumption that tariffs are permanent. potential output; in CFRT, a reduction in market
Channels. The first trade model (CP) emphasizes access prompts some firms to stop exporting, and less
losses because tariffs move resources inefficiently across productive firms enter in import-competing sectors.
sectors. Losses in the second model (CFRT) tend to be The effect on the United States is smallest in CP, as
larger because tariffs reduce access to foreign markets relative to CFRT it does not account for productivity
by the most productive firms, while leading to entry losses due to productive firms exiting. The impact
of less productive firms domestically. The third model on other regions varies across models, with GIMF
(GIMF) emphasizes lower levels of capital accumu- showing large negative effects for the euro area and
lation from tariff-related distortions. In all models, Other Asia, while trade models show relatively small
tariffs imposed by large countries can create favorable effects for those regions. This is because of greater
terms-of-trade effects. Finally, results depend crucially trade reallocation in the latter models, reflecting the
on the ease with which importers can substitute across larger elasticities of substitution, which create scope
different exporters (trade elasticities) and across foreign for countries less directly exposed, or facing smaller
and domestic producers (macro elasticities). Elasticities tariffs, to benefit from the reconfiguration of global
are greater in the two trade models than in GIMF. trade. In GIMF, all countries are instead affected by
Trade. Tariffs permanently reduce global trade tariff-induced distortions along global supply chains,
and reallocate flows across countries (Table 1.2.1, which also explains why the negative impact on global
panel 1). Canada, Mexico, China, and especially the output is greater. More generally, the combined effects
United States see the largest declines in exports, in the from lower capital accumulation (captured by GIMF),
latter country due in large part to the long-term real sectoral misallocation (captured by the trade models),
appreciation of the US dollar. Although China sees the and prolonged trade policy uncertainty (not included
largest tariff increase, the decline in China’s exports in the simulations) would compound the losses for
is mitigated by export diversion to other markets. each region and could well offset any positive impact
Magnitudes are broadly similar across GIMF and the from trade reallocation.

Table 1.2.1. Long-Run Effects of Tariffs

(Percent deviation from a forecast with no tariffs)
1. Real Exports 2. Real GDP
Trade Models Trade Models
GIMF CP CFRT GIMF CP CFRT
United States –19.3 –21.8 –27.6 –1.3 –0.3 –0.9
China –5.4 –4.9 –6.7 –1.1 –0.5 –0.7
Canada and Mexico –5.7 –1.8 –6.0 –1.9 –0.5 –0.7
Euro Area –1.1 0.0 –0.5 –0.6 0.0 –0.2
Other Asia –1.6 –0.1 –0.3 –1.0 0.0 0.3
World –5.1 –3.1 –4.2 –0.9 –0.2 –0.4
Sources: Caliendo and Parro (CP) 2015; Caliendo, Feenstra, Romalis, and Taylor (CFRT) 2023; and IMF staff estimates.
Note: The table shows the percent deviation from a forecast with no tariffs. “Other Asia” includes Bangladesh, Brunei Darussalam, Cambodia, India,
Indonesia, the Lao People’s Democratic Republic, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. GIMF = IMF’s Global
Integrated Monetary and Fiscal model.

34 International Monetary Fund | April 2025

 Commodity Special Feature  Market Developments and the Impact of AI on Energy Demand

Commodity Special
Special Feature:
Feature Title:Market
SpecialDevelopments
Feature Head and the
Impact of AI on Energy Demand

Primary commodity prices increased 1.9 percent between Figure 1.SF.1. Commodity Market Developments
August 2024 and March 2025, with the rise driven by
400 1. Commodity Prices
natural gas, precious metals, and beverage prices. In oil (Index, 2016 = 100, US CPI adjusted)
markets, prices fell amid concerns that a trade war could
All commodities
dampen global demand, adding to downward pressure 300
Base metals
from robust oil production growth outside OPEC+ Food
Energy
(Organization of the Petroleum Exporting Countries plus 200
selected nonmember countries, including Russia) and
the unwinding of OPEC+ supply cuts. With the notable 100
exception of gold prices, which continued to soar owing
to geopolitical uncertainty, and prices of some staples like 0
2015 16 17 18 19 20 21 22 23 24 25 26 27
wheat, most commodity prices have dropped since the
announcement of additional tariffs by the US adminis-
tration on April 2. This Special Feature also analyzes the 90 2. Brent Crude Oil Price Forecasts
(US dollars per barrel; expiration dates on x-axis)
impact of artificial intelligence (AI) on energy demand. 85
October 2023 WEO
80 April 2024 WEO
October 2024 WEO
Commodity Market Developments 75 April 2025 WEO

Oil prices declined 9.7 percent between August 2024 70

and March 2025 as trade war fears, strong non-OPEC+
supply growth, and the unwinding of OPEC+ cuts more 65

than offset lingering supply risks. Oil prices then plum- 60

2024 25 26 27 28 29 30
meted in early April amid escalating trade tensions,
adding to an already-bearish outlook. This latest catalyst Sources: Bloomberg, L.P.; Haver Analytics; IMF, Primary Commodity Price System;
compounded weak fundamentals, with supply growth International Energy Agency; and IMF staff calculations.
expected to likely outpace tepid global demand growth Note: In panel 1, latest actual CPI value is applied to forecasts, represented by the
dashed portions of the graph lines. CPI = consumer price index; WEO = World
through 2025 and 2026. Demand concerns were exacer- Economic Outlook.
bated by sluggish Chinese demand, partly dented by the
rising penetration of electric vehicles (EVs).
balanced. Upside price risks from potential disruptions
In this context, OPEC+ policy will be pivotal:
in oil supply from countries subject to sanctions or a
Facing pressure to roll back its deep and sustained cuts,
de-escalation of trade barriers are offset by the possibil-
OPEC+ has decided to start gradually unwinding them
ity of a further escalation in the trade war and addi-
despite a broader environment of falling prices. The
tional increases in OPEC+’s production schedule.
harshest sanctions on Russia to date (imposed on Jan-
Natural gas prices reversed course in the first week of
uary 10, 2025) have not materially disrupted oil flows.
April, beginning to decline alongside oil prices after a
Russian oil, exported primarily to China and India, has
six-month period of gains. Title Transfer Facility (TTF)
traded at a $5–$15 discount to Brent. Futures markets
trading hub prices in Europe rose 7.7 percent between
indicate that oil prices will average $66.9 per barrel in
August 2024 and March 2025 to $13.1 a million British
2025, a 15.5 percent decline, before falling to $62.4 in
thermal units (MMBtu). This was above the historical
2026 (Figure 1.SF.1, panel 2). Risks to this outlook are
average but well below the 2022 peak. Among other fac-
The contributors to this Special Feature are Christian Bogmans, tors, a cold snap and various supply disruptions, includ-
Patricia Gomez-Gonzalez, Giovanni Melina (team co-lead), Jorge ing a halt of Russian gas to Europe through Ukraine at
Miranda-Pinto, Andrea Paloschi, Andrea Pescatori (team lead), and the beginning of January 2025, explained the upward
Sneha Thube, with research assistance from Ganchimeg Ganpurev,
Maximiliano Jerez Osses, and Joseph Moussa. This Special Feature is trend. Similarly, harsh weather and a surge in demand
based on Bogmans and others (2025). for gas exports led to a doubling in Henry Hub prices.

International Monetary Fund | April 2025 35

WORLD ECONOMIC OUTLOOK: A Critical Juncture amid Polic y Shifts

Weak demand from China, in contrast, kept Asian Power Hungry: How AI Will Drive
liquefied natural gas prices almost constant over the same Energy Demand
period. Following the April 2 tariff announcement, gas
The rapid development and adoption of generative
prices reversed course, with concerns about future energy
AI models, including large language models, require
demand pushing gas prices down across the board. As of
building more data centers that consume vast amounts
April 4, futures markets suggested that TTF prices will
of electricity. Large language models’ costs have two
average $12.5 a MMBtu in 2025, steadily decreasing to
main components: a large fixed cost for training the
$7.8 a MMBtu in 2030. Henry Hub prices are expected
models and variable costs for operating and responding
to decline from $4.0 a MMBtu in 2025 to $3.3 a
to user prompts.1 Because substantial computational
MMBtu in 2030. Risks to this outlook are balanced.
resources are required during both stages, electricity
Metals prices rose amid safe-haven demand and supply
consumption represents a critical input for companies
disruptions until the end of March, but things changed
delivering AI services. In northern Virginia, which
abruptly on April 2. The IMF’s metals price index
features the largest concentration of data centers in the
increased by 11.2 percent between August 2024 and
world, the square footage of server-filled warehouses
March 2025 (Figure 1.SF.1, panel 1), with the rise
is now roughly equivalent to the floor space of eight
driven mainly by gold, aluminum, and copper prices.
Empire State Buildings (Cushman & Wakefield 2024).
Among base metals, aluminum (12.7 percent) and cop-
Using a multicountry computable general equilib-
per prices (8.4 percent) increased the most because of
rium (CGE) model, IMF-ENV (Chateau and others
supply concerns. Both metals also faced demand pres-
2025), this Special Feature seeks to answer the follow-
sures from front-loading ahead of tariffs. Like those for
ing questions: (1) How fast have sectors involved in the
energy, industrial metals prices dropped abruptly in the
development and delivery of AI-related services grown
first week of April as trade tensions escalated. Futures
in recent years, and what has happened to their electric-
markets now predict a downturn in prices for base
ity consumption? (2) How does the projected electricity
metals, with price declines of 5.7, 4.5 and 14.3 percent
demand from AI by 2030 compare with other drivers
for aluminum, copper, and iron ore, respectively, by
of demand, such as EVs? (3) What is the impact on
the end of 2026. This stands in contrast to what has
energy prices and the mix of electricity sources under
taken place regarding prices for precious metals: Gold
alternative policy scenarios? (4) What will be the impact
prices have repeatedly set new records amid policy
of data centers’ growth on carbon emissions?
and geopolitical uncertainty, recently surpassing their
historical high at $3,000 per ounce.
Agricultural commodity prices increased as a result The Growing Macroeconomic Relevance of
of adverse weather. Between August 2024 and March AI-Producing Sectors
2025, the IMF’s food and beverages price index
In the US, AI-producing sectors’ value added
increased by 3.6 percent, with the rise driven by
quadrupled from $278 billion (in constant 2017
higher beverage prices. Cereal prices increased mod-
dollars) to $1.13 trillion between 2010 and 2023, a
estly, by 0.6 percent, as concerns over crop conditions
rate much faster than those for private nonfarm and
for wheat and corn subsided. Coffee prices jumped
manufacturing value added. As a result, these sectors’
33.8 percent, with the IMF coffee index reaching
share in total US GDP increased from 2.4 percent in
historic highs in February because of weather-related
2013 to 3.5 percent in 2023, with the data-processing
supply concerns in Brazil. Meanwhile, rice prices fell
sector nearly doubling its share in the same period.
26.0 percent as crop conditions improved in India
Meanwhile, the share of manufacturing declined by
and other parts of Asia. New trade barriers imposed in
1.5 percentage points (Figure 1.SF.2, panel 1). This
April had heterogeneous effects on agricultural prices.
fast growth of AI-producing sectors was driven by
The price of income-elastic (coffee) and trade-sensitive
remarkable gains in labor productivity, with value
(soybeans) crops have declined sharply, whereas prices
added per employee in the data-processing sector
for staples like corn and wheat are so far less affected.
Upside risks stem from trade disruptions and adverse
1Large fixed costs create economies of scale that concentrate AI
weather; larger-than-expected harvests, trade war
development among a few large players (Korinek and Vipra 2024),
intensification, and broader uncertainty are the main although this pool has expanded recently as more variation in the
downside risks. cost structure of large language models has emerged.

36 International Monetary Fund | April 2025

 Commodity Special Feature  Market Developments and the Impact of AI on Energy Demand

Figure 1.SF.2. The Growing Macroeconomic Relevance of Figure 1.SF.3. AI’s Demand for Electricity
AI-Producing Sectors (Thousands of terawatt-hours; electricity demand for data centers compared
with that in top electricity-consuming countries in 2023)
3.0 1. Share of AI-Related Value-Added Output in GDP 13.0
(Percent of nominal GDP) 10
2.5 Data processing (NAICS 518 and 519) 12.5
Computer systems design (NAICS 5415)
2.0 Manufacturing (right scale) 12.0 8

1.5 11.5
6
1.0 11.0

0.5 10.5
4
0 10.0
2013 2023
2
16 2. Contributions to Sectoral Gross Output Growth in AI-Producing Sectors
14 (Percent)
TFP growth 0
12 Intermediates CHN USA IND DCs RUS EVs JPN BRA KOR CAN GER DCs FRA
10 Capital (2030e) (2030e) (2023e)
8 Labor
Sources: International Energy Agency (IEA); Organization of the Petroleum Exporting
6 Countries (OPEC); and IMF staff calculations.
4 Note: Estimates for data centers (DCs) and electric vehicles (EVs) are for the world and
2 come from OPEC and the IEA, respectively. Data labels in the figure use International
0 Organization for Standardization (ISO) country codes. e = estimate.
−2
2007–11 12–16 17–21 2007–11 12–16 17–21
Data processing Computer systems design
for only 0.8–1.5 percent for semiconductor firms and
Sources: Haver Analytics; BEA-BLS Integrated Industry-Level Production Accounts AI service companies. However, the latter have almost
(KLEMS); and IMF staff calculations. doubled the share of electricity costs in their total costs
Note: AI = artificial intelligence; NAICS = North American Industry Classification in less than five years (see Online Annex Figure 1.1.3
System; TFP = total factor productivity.
in Online Annex 1.1). As these companies integrate
vertically by building, operating, and leasing their own
growing about four times faster than that in the whole data centers, that share will likely continue to grow.
economy over the past 10 years (see Online Annex The broader implications for global electricity
Figure 1.1.2, panel 1 in Online Annex 1.1).2 This consumption are substantial. Worldwide electricity
productivity growth was largely the result of elevated consumption from data centers and AI is estimated to
investment in physical capital and the complementar- have reached 400–500 terawatt-hours (TWh) in 2023,
ity of intermediate inputs, contrary to what was the more than double the level in 2015 (OPEC 2024). For
case in computer systems design, in which labor and the United States, where growth is the fastest, electric-
total factor productivity (TFP) contributed signifi- ity demand from data centers is expected to increase
cantly to output growth (Figure 1.SF.2, panel 2). from 178 TWh in 2024 to 606 TWh in 2030 under
Hence, the high output per employee in data centers, a medium-demand scenario (McKinsey & Company
compared with that in other sectors, is the result 2024a). By 2030, AI-driven global electricity con-
of rapid capital accumulation, which has increased sumption could hit 1,500 TWh, conceivably making
energy consumption as an intermediate input. its level comparable to that of India’s current total
electricity consumption, the third highest in the world.
This projected electricity demand from AI by 2030 is
AI’s Demand for Electricity about 1.5 times higher than expected demand from
Electricity costs make up 13–15 percent of total EVs, another emerging source of electricity demand
costs for data center companies, whereas they account (Figure 1.SF.3).
Recent developments in the AI industry have
2All online annexes are available at www.imf.org/en/Publications/ increased uncertainty about its future compute and
WEO. energy demands. Companies such as DeepSeek are

International Monetary Fund | April 2025 37

WORLD ECONOMIC OUTLOOK: A Critical Juncture amid Polic y Shifts

achieving breakthroughs in algorithmic efficiency 8 percent in the United States (525 TWh), 3 percent
that may lower the computational costs of AI mod- in Europe (145 TWh), and 2 percent in China
els faster than previously anticipated. However, these (237 TWh) relative to the baseline scenario. In the AI
efficiency gains may be counterbalanced by greater use scenario under alternative energy policies, the increase
of compute by companies pursuing better-perform- in total electricity supply is kept the same, but its
ing models (Hoffmann and others 2022). Adding to composition shifts in favor of renewables. In China,
this complexity is the recent emergence of reasoning the United States, and Europe, generation from solar
models—which require more compute in their deploy- and wind sources offsets about 166 TWh, 58 TWh,
ment—and possibly greater AI use driven by lower and 35 TWh of generation, respectively, from other
costs and availability of open-source models. sources, including largely coal power in China and
natural gas in the US (Figure 1.SF.4, panel 1).
In both scenarios, the rising marginal costs of
The Effects of Increased Demand for Electricity electricity supply mean that the increase in generation
In the IMF-ENV model, the impact of AI is is less than proportional to economy-wide demand
captured by an increase in information technology growth, which drives electricity prices up. At the
(IT) sectors’ TFP in China, the United States, and same time, strong commitment of major AI players to
Europe to match the expected increase in data center resolving medium-term power supply rigidities4 could
power demand between 2025 and 2030 (see Online lead to a smaller increase in electricity prices. In this
Annex Table 1.1.1. in Online Annex 1.1). This growth case, the surge would be 0.9 percent in the United
is projected at constant annual rates of 22, 13, and States, 0.45 percent in Europe, and 0.35 percent in
10 percent, respectively (JP Morgan 2024; McKinsey China under current energy policies (Figure 1.SF.4,
& Company 2024a, 2024b). panel 2). However, material pressure on prices would
Three scenarios are simulated here: (1) a baseline be added if the renewables scale-up slows from recent
scenario, which excludes the AI-related TFP shock trends and if further investments are not made in
but reflects energy and emissions projections consis- transmission and distribution capacities (relative to
tent with policies introduced through 2024; (2) an AI those in the baseline). The price increase in the AI sce-
scenario under current energy policies, which models the nario under current energy policies could escalate up to
AI-related TFP shock, assuming that the composition 5.3 percent in China, 8.6 percent in the United States,
of electricity generation remains identical to that in the and 3.6 percent in Europe by 2030 (Figure 1.SF.4,
baseline scenario; and (3) an AI scenario under alterna- panel 2), adding to price pressures coming from many
tive energy policies, under which the share of renewables other sources.5
in total electricity generation is aligned with regions’ In addition, without further investments in trans-
long-term strategies using feed-in tariffs for renewables, mission and distribution, support for the expansion of
though in practice policy choices will be guided by the AI sector would require redirecting electricity from
countries’ preferences.3 Results for both AI scenarios other economic activities. Such a shift would pose
are reported as deviations from the baseline scenario, significant challenges, especially for energy-intensive
unless stated otherwise. manufacturing sectors. In the United States, for exam-
The AI shock increases electricity consumption ple, annual growth in the value added of these sectors
by the IT sector, and power producers are expected would fall by an average of 0.3 percentage point
to expand generation. The composition of electricity compared with that in the baseline scenario, reducing
generation by technologies varies across countries and
is based on their relative production costs and current 4Public investments are being made in the United States for

policies. By 2030, in the AI scenario under current upgrading transmission and distribution infrastructure to meet
rising electricity demand. Innovative solutions like power coupling
energy policies, total electricity supply increases by (Engel, Posner, and Varadarajan 2025) and small modular nuclear
reactors could offer flexibility, making constraints less restrictive than
3AI expansion relies on electricity growth, so countries’ energy expected. Most new nuclear capacity in the United States is expected
policies should focus on supply. Different supply-side policies affect online no earlier than the early 2030s.
prices, GDP, and revenue (Chateau, Jaumotte, and Schwerhoff 5Chandramowli and others (2024) estimate a 19 percent rise in US

2024). Feed-in tariffs for solar photovoltaic (PV) and wind are wholesale electricity prices from 2025 to 2028 because of increased
simulated owing to their historical inclusion in policy packages and demand driven not only by data centers, but also by electrification
because these renewables are cost competitive with fossil fuels in of buildings and transportation, battery and fuel cell manufacturing,
these regions (IRENA 2024). AI, and cryptocurrency mining.

38 International Monetary Fund | April 2025

 Commodity Special Feature  Market Developments and the Impact of AI on Energy Demand

Figure 1.SF.4. The Effects of Increased Demand for Electricity Figure 1.SF.5. Emission Impacts of Expansion in IT Sector
(MtCO2e; cumulative greenhouse gas emissions; Percent change relative to
300 1. Electricity Supply and Generation Mix, 2030 1,000 that in baseline, right scale)
(TWh; change in generation mix under alternative energy
800
200 policies relative to that under current policies) 2.0 US 1.4
600 Rest of the world
100 400 Europe 1.2
200 1.6 China
0 0 World (right scale)
1.0
−200
−100 Others Oil Nuclear −400 1.2
Natural gas Coal Hydropower 0.8
−200 −600
Solar and Change in total electricity
wind supply (right scale) −800 0.6
0.8
−300 −1,000
China United States Europe
0.4
2. Change in Electricity Prices, 2030 0.4
(Percent; change relative to that in baseline scenario) 0.2
16
14 Current policies with no additional investments in
transmission and distribution 0 0
12 Current policies Alternative policies
Current policies with smaller renewables scale-up
10 Current policies
Alternative policies with no additional investments Sources: IMF, IMF-ENV model; and IMF staff calculations.
8 in transmission and distribution Note: The left axis shows the total greenhouse gas emissions increase in metric
6 Alternative policies with smaller renewables scale-up tons of carbon dioxide equivalent (MtCO2e) between 2025 and 2030 resulting from
Alternative policies information technology (IT) sector expansion in selected regions. The right axis shows
4 the total increase in global emissions in 2030 relative to the baseline emissions as a
2 result of this expansion.
0
China Europe United States
sector limits the total cumulative global GHG emissions
Sources: IMF, IMF-ENV model; and IMF staff calculations. increase to 1.3 Gt by 2030, which is 24 percent less
Note: In panel 1, the left axis shows the change in generation mix under alternative than in the AI scenario under current energy policies.6
energy policies relative to current policies in terawatt-hours (TWh). Feed-in tariffs In the AI scenario under current energy policies, the
increase generation from solar and wind sources. The right axis shows the total
increase in electricity supply relative to the baseline scenario in TWh, which is AI shock raises the average annual growth rate of
identical under both current energy policies and alternative energy policies. global GDP by 0.5 percentage point between 2025
and 2030, in line with previous IMF estimates ranging
annual GDP growth by 0.1 percentage point. The elec- between 0.1 percentage point and 0.8 percentage point
tricity price increase is more muted in the AI scenario (April 2024 World Economic Outlook). The impact is
under alternative energy policies owing to feed-in tariffs greater in countries where the projected growth rate
on solar and wind. The tariffs reduce the generation of the IT sector and its relative importance in the
price of these technologies, which have relatively low economy are higher. In the AI scenario under alternative
production costs and a higher share in total electricity energy policies, these gains are slightly reduced because
generation compared with those in the AI scenario of the feed-in tariff polices. The total fiscal costs of
under current energy policies. these tariffs range from 0.3 percent to 0.6 percent
In both AI scenarios, global and regional greenhouse of GDP across countries and are financed through
gas (GHG) emissions increase because of the increased increased lump-sum taxes, which slightly reduce house-
energy demand resulting from the expanded IT sector hold consumption. However, the growth benefits from
and its spillovers to the economy. In the AI scenario AI expansion far outweigh these costs, resulting in sim-
under current energy policies, the 2030 increase is 5.5, ilar average annual GDP growth across both scenarios.
3.7, and 1.2 percent in the US, Europe, and China, In summary, although the AI-induced expansion
respectively, with a global average increase of 1.2 percent of the IT sector is expected to raise global GDP, the
(Figure 1.SF.5). In cumulative terms, this translates development also comes at the cost of higher carbon
into a global GHG emissions increase of 1.7 gigatons emissions. Drawing on a median social cost of carbon
(Gt) between 2025 and 2030, which is similar to Italy’s
6This estimate is conservative compared with that of Stern and
energy-related GHG emissions over a five-year period.
Romani (2025), who project that AI’s energy demand could contrib-
Notably, in the AI scenario under alternative energy ute between 0.4 and 1.6 Gt of carbon dioxide equivalent annually
policies, even a modest decarbonization of the power by 2035.

International Monetary Fund | April 2025 39

WORLD ECONOMIC OUTLOOK: A Critical Juncture amid Polic y Shifts

estimate of $39 per ton—based on 147 published responsive—will lead to a small increase in electricity
studies with more than 1,800 estimates (Moore and prices. More sluggish supply responses will lead to
others 2024)—the additional social cost of 1.3 to much stronger price surges. In the United States, the
1.7 Gt of carbon-dioxide-equivalent emissions is country with the largest expected surge in electricity
about $50.7 billion to $66.3 billion, or 1.3 percent demand, AI expansion alone could increase electricity
to 1.7 percent of the AI-driven increase in real world prices by up to 9 percent, adding to price pressures
GDP between 2025 and 2030. coming from many other sources.
In addition, under current energy policies, the
AI-driven rise in electricity demand could add 1.7
Conclusions and Policy Implications Gt in global greenhouse gas emissions between 2025
As AI technologies continue to evolve and prolifer- and 2030, an amount similar to Italy’s energy-related
ate, demand for computational power and electricity GHG emissions over a five-year period. The social cost
is poised for a significant surge. Despite challenges of these extra emissions is minor compared with the
related to higher electricity prices and GHG emissions, expected economic gains from AI, yet it still adds to
the gains to global GDP from AI are likely to out- the worrying buildup of worldwide emissions.
weigh the costs of the additional emissions. The eco- Demand for computing and electricity from AI
nomic benefits, however, may not be evenly distributed service producers is subject to wide uncertainty, which
across countries and among different groups within may delay energy investments, causing underinvest-
societies, potentially exacerbating existing inequalities. ment and higher prices. Policymakers and businesses
Increasing electricity demand from the IT sector must work together to ensure AI achieves its full
will stimulate overall supply, which—if sufficiently potential, while minimizing societal costs.

40 International Monetary Fund | April 2025

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Annex Table 1.1.1. European Economies: Real GDP, Consumer Prices, Current Account Balance, and Unemployment
(Annual percent change, unless noted otherwise)
Real GDP Consumer Prices1 Current Account Balance2 Unemployment3
Projections Projections Projections Projections
2024 2025 2026 2024 2025 2026 2024 2025 2026 2024 2025 2026
Europe 1.8 1.4 1.6 7.8 6.2 4.3 2.5 1.9 1.7 ... ... ...
Advanced Europe 1.0 1.0 1.3 2.3 2.2 2.0 3.1 2.6 2.4 5.8 5.9 5.8
Euro Area4, 5 0.9 0.8 1.2 2.4 2.1 1.9 2.8 2.3 2.1 6.4 6.4 6.3
Germany –0.2 0.0 0.9 2.5 2.1 1.9 5.7 5.2 5.0 3.4 3.5 3.2
France 1.1 0.6 1.0 2.3 1.3 1.6 0.4 0.2 –0.2 7.4 7.7 7.4
Italy 0.7 0.4 0.8 1.1 1.7 2.0 1.1 0.9 0.9 6.6 6.7 6.7
Spain 3.2 2.5 1.8 2.9 2.2 2.0 3.0 2.4 2.2 11.3 11.1 11.0
The Netherlands 1.0 1.4 1.4 3.2 2.8 2.3 9.9 10.4 10.5 3.7 3.8 4.0
Belgium 1.0 0.8 1.0 4.3 3.2 2.1 –0.9 –1.1 –1.3 5.7 5.9 5.7
Ireland 1.2 2.3 2.1 1.3 1.9 1.7 17.2 11.6 11.0 4.3 4.5 4.7
Austria –1.2 –0.3 0.8 2.9 3.2 1.7 2.4 2.6 2.8 5.4 5.6 5.5
Portugal 1.9 2.0 1.7 2.7 1.9 2.1 2.2 1.7 1.5 6.5 6.4 6.3
Greece 2.3 2.0 1.8 3.0 2.4 2.1 –6.9 –6.5 –5.9 10.1 9.4 9.0
Finland –0.1 1.0 1.4 1.0 2.0 2.0 0.3 –0.5 –0.6 8.4 8.1 7.6
Slovak Republic 2.0 1.3 1.7 3.2 3.7 2.9 –2.8 –1.9 –1.5 5.4 5.8 5.9
Croatia 3.8 3.1 2.7 4.0 3.7 2.6 –1.2 –0.7 –0.6 5.5 5.3 5.3
Lithuania 2.7 2.8 2.5 0.9 3.5 2.8 2.5 2.0 1.7 7.1 6.6 6.1
Slovenia 1.6 1.8 2.4 2.0 2.6 2.3 4.4 3.6 3.3 3.7 3.9 4.0
Luxembourg 1.0 1.6 2.2 2.3 2.2 2.1 13.8 8.8 7.8 5.7 6.1 6.2
Latvia –0.4 2.0 2.5 1.3 2.4 2.4 –2.1 –2.5 –2.4 6.9 6.7 6.6
Estonia –0.3 0.7 1.8 3.7 5.8 3.9 –1.1 –2.6 –2.4 7.5 7.1 6.9
Cyprus 3.4 2.5 2.7 2.3 2.3 2.0 –6.8 –7.3 –7.8 4.9 4.8 5.0
Malta 6.0 3.9 3.9 2.4 2.1 1.9 6.1 6.2 6.1 3.1 3.1 3.1
United Kingdom 1.1 1.1 1.4 2.5 3.1 2.2 –3.4 –3.7 –3.7 4.3 4.5 4.4
Switzerland 1.3 0.9 1.6 1.1 0.2 0.5 5.1 5.0 5.2 2.4 2.8 2.8
Sweden 1.0 1.9 2.2 2.0 2.1 2.0 7.4 6.8 6.0 8.4 8.2 8.0
Czech Republic 1.1 1.6 1.8 2.4 2.5 2.0 1.8 –0.1 –0.6 2.8 2.5 2.4
Norway 2.1 2.1 1.7 3.1 2.6 2.2 17.1 15.9 15.1 4.0 3.9 3.9
Denmark 3.7 2.9 1.8 1.3 1.9 2.1 13.0 12.6 12.4 2.9 3.0 3.0
Iceland 0.5 2.0 2.4 5.9 3.5 2.7 –2.5 –1.9 –1.2 3.4 4.0 4.0
Andorra 3.4 1.9 1.6 3.1 2.2 1.8 15.1 16.9 16.9 1.4 1.6 1.8
San Marino 0.7 1.0 1.3 1.2 2.0 2.0 6.3 4.0 3.3 4.4 4.4 4.5
Emerging and Developing Europe6 3.4 2.1 2.1 16.8 13.5 8.7 0.0 –1.0 –1.0 ... ... ...
Russia 4.1 1.5 0.9 8.4 9.3 5.5 2.9 1.9 1.8 2.5 2.8 3.5
Türkiye 3.2 2.7 3.2 58.5 35.9 22.8 –0.8 –1.2 –1.2 8.7 9.4 9.2
Poland 2.9 3.2 3.1 3.7 4.3 3.4 0.1 –0.3 –0.7 2.8 2.9 3.0
Romania 0.9 1.6 2.8 5.6 4.6 3.1 –8.3 –7.6 –7.4 5.4 5.4 5.2
Ukraine7 3.5 2.0 4.5 6.5 12.6 7.7 –7.0 –15.9 –10.6 13.1 11.6 10.2
Hungary 0.5 1.4 2.6 3.7 4.9 3.6 2.2 1.0 1.1 4.5 4.6 4.2
Belarus 4.0 2.8 2.0 5.7 5.5 5.8 –2.8 –2.8 –2.9 3.0 2.9 2.9
Bulgaria 2.8 2.5 2.7 2.6 3.7 2.3 0.2 –1.5 –1.0 4.2 4.1 4.1
Serbia 3.9 3.5 4.2 4.7 4.0 3.3 –6.3 –5.8 –5.7 8.6 8.5 8.4
Source: IMF staff estimates.
Note: Data for some countries are based on fiscal years. Please refer to Table F in the Statistical Appendix for a list of economies with exceptional reporting periods.
1 Movements in consumer prices are shown as annual averages. Year-end to year-end changes can be found in Tables A6 and A7 in the Statistical Appendix.
2 Percent of GDP.
3 Percent. National definitions of unemployment may differ.
4 Current account position corrected for reporting discrepancies in intra-area transactions.
5 Based on Eurostat’s harmonized index of consumer prices except for Slovenia.
6 Includes Albania, Bosnia and Herzegovina, Kosovo, Moldova, Montenegro, and North Macedonia.
7 See the country-specific note for Ukraine in the “Country Notes” section of the Statistical Appendix.

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 WORLD ECONOMIC OUTLOOK: A Critical Juncture amid Polic y Shifts

Annex Table 1.1.2. Asian and Pacific Economies: Real GDP, Consumer Prices, Current Account Balance, and Unemployment
(Annual percent change, unless noted otherwise)
Real GDP Consumer Prices1 Current Account Balance2 Unemployment3
Projections Projections Projections Projections
2024 2025 2026 2024 2025 2026 2024 2025 2026 2024 2025 2026
Asia 4.6 3.9 4.0 2.1 1.8 2.0 2.6 2.0 1.8 ... ... ...
Advanced Asia 1.5 1.2 1.4 2.6 2.1 1.9 5.4 4.5 4.5 2.9 3.0 3.0
Japan 0.1 0.6 0.6 2.7 2.4 1.7 4.8 3.4 3.3 2.6 2.6 2.6
Korea 2.0 1.0 1.4 2.3 1.8 1.8 5.3 3.5 3.6 2.8 3.0 3.0
Australia 1.0 1.6 2.1 3.2 2.5 3.5 –1.9 –3.1 –3.4 4.0 4.3 4.5
Taiwan Province of China 4.3 2.9 2.5 2.2 1.8 1.6 15.7 18.5 19.6 3.4 3.4 3.4
Singapore 4.4 2.0 1.9 2.4 1.3 1.5 17.5 17.2 17.0 2.0 2.0 1.9
Hong Kong SAR 2.5 1.5 1.9 1.7 1.9 2.2 13.0 11.4 11.0 3.0 3.5 3.4
New Zealand –0.5 1.4 2.7 2.9 2.0 2.0 –6.0 –4.9 –4.7 4.7 5.3 5.3
Macao SAR 8.8 3.6 3.5 0.7 0.9 1.3 31.7 30.0 28.9 1.8 1.7 1.7
Emerging and Developing Asia 5.3 4.5 4.6 2.0 1.7 2.0 1.5 1.1 0.9 ... ... ...
China 5.0 4.0 4.0 0.2 0.0 0.6 2.3 1.9 1.7 5.1 5.1 5.1
India4 6.5 6.2 6.3 4.7 4.2 4.1 –0.8 –0.9 –1.4 4.9 4.9 4.9
Indonesia 5.0 4.7 4.7 2.3 1.7 2.5 –0.6 –1.5 –1.6 4.9 5.0 5.1
Thailand 2.5 1.8 1.6 0.4 0.7 0.9 2.1 1.2 1.2 1.0 1.0 1.0
Vietnam 7.1 5.2 4.0 3.6 2.9 2.5 6.1 3.2 1.9 2.2 2.0 2.0
Malaysia 5.1 4.1 3.8 1.8 2.4 2.2 1.7 1.6 1.8 3.2 3.2 3.2
Philippines 5.7 5.5 5.8 3.2 2.6 2.9 –3.8 –3.4 –3.2 3.8 4.5 4.5
Other Emerging and Developing Asia5 3.8 3.5 5.2 9.5 9.9 6.5 –0.2 –0.6 –0.9 ... ... ...
Memorandum
ASEAN-56 4.6 4.0 3.9 2.0 1.7 2.2 2.6 2.1 2.0 ... ... ...
Emerging Asia7 5.4 4.6 4.6 1.6 1.4 1.8 1.6 1.2 0.9 ... ... ...
Source: IMF staff estimates.
Note: Data for some countries are based on fiscal years. Please refer to Table F in the Statistical Appendix for a list of economies with exceptional reporting periods.
1 Movements in consumer prices are shown as annual averages. Year-end to year-end changes can be found in Tables A6 and A7 in the Statistical Appendix.
2 Percent of GDP.
3 Percent. National definitions of unemployment may differ.
4 See the country-specific note for India in the “Country Notes” section of the Statistical Appendix.
5 Other Emerging and Developing Asia comprises Bangladesh, Bhutan, Brunei Darussalam, Cambodia, Fiji, Kiribati, Lao P.D.R., Maldives, the Marshall Islands, Micronesia,

Mongolia, Myanmar, Nauru, Nepal, Palau, Papua New Guinea, Samoa, the Solomon Islands, Sri Lanka, Timor-Leste, Tonga, Tuvalu, and Vanuatu.
6 Indonesia, Malaysia, the Philippines, Singapore, and Thailand.
7 Emerging Asia comprises China, India, Indonesia, Malaysia, the Philippines, Thailand, and Vietnam.

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Annex Table 1.1.3. Western Hemisphere Economies: Real GDP, Consumer Prices, Current Account Balance, and
Unemployment
(Annual percent change, unless noted otherwise)
Real GDP Consumer Prices1 Current Account Balance2 Unemployment3
Projections Projections Projections Projections
2024 2025 2026 2024 2025 2026 2024 2025 2026 2024 2025 2026
North America 2.6 1.6 1.7 3.1 3.0 2.5 –3.5 –3.3 –2.9 ... ... ...
United States 2.8 1.8 1.7 3.0 3.0 2.5 –3.9 –3.7 –3.2 4.0 4.2 4.2
Mexico 1.5 –0.3 1.4 4.7 3.5 3.2 –0.3 –0.5 –1.1 2.7 3.8 3.8
Canada 1.5 1.4 1.6 2.4 2.0 2.1 –0.5 –0.1 –0.3 6.4 6.6 6.5
Puerto Rico4 1.0 –0.8 –0.1 1.6 2.1 1.9 ... ... ... 6.2 6.5 6.1
South America5 2.2 2.5 2.4 23.5 9.1 5.5 –1.3 –1.5 –1.5 ... ... ...
Brazil 3.4 2.0 2.0 4.4 5.3 4.3 –2.8 –2.3 –2.2 6.9 7.2 7.3
Argentina –1.7 5.5 4.5 219.9 35.9 14.5 1.0 –0.4 –0.3 7.2 6.3 6.0
Colombia 1.7 2.4 2.6 6.6 4.7 3.1 –1.8 –2.3 –2.4 10.2 10.0 9.8
Chile 2.6 2.0 2.2 3.9 4.4 3.2 –1.5 –2.1 –2.4 8.5 8.1 8.1
Peru 3.3 2.8 2.6 2.4 1.7 1.9 2.2 1.7 1.3 6.4 6.5 6.5
Ecuador –2.0 1.7 2.1 1.5 1.3 1.5 5.8 3.4 2.6 3.4 4.0 3.8
Venezuela 5.3 –4.0 –5.5 49.0 180.0 225.0 2.4 –0.1 –0.5 ... ... ...
Bolivia 1.3 1.1 0.9 5.1 15.1 15.8 –4.3 –2.5 –3.0 5.0 5.1 5.1
Paraguay 4.0 3.8 3.5 3.8 3.7 3.5 –3.9 –2.4 –2.7 5.8 5.7 5.7
Uruguay 3.1 2.8 2.6 4.8 5.5 5.3 –1.0 –1.5 –1.7 8.2 8.0 8.0
Central America6 3.9 3.8 3.9 2.3 2.9 3.4 –0.9 –0.9 –1.3 ... ... ...
Caribbean7 12.1 4.2 8.6 6.3 6.3 5.9 4.1 0.6 0.3 ... ... ...
Memorandum
Latin America and the Caribbean8 2.4 2.0 2.4 16.6 7.2 4.8 –0.9 –1.1 –1.4 ... ... ...
Eastern Caribbean Currency Union9 3.9 3.5 2.7 2.3 1.9 2.0 –10.4 –9.9 –8.3 ... ... ...
Source: IMF staff estimates.
Note: Data for some countries are based on fiscal years. Please refer to Table F in the Statistical Appendix for a list of economies with exceptional reporting periods.
1 Movements in consumer prices are shown as annual averages. Year-end to year-end changes can be found in Tables A6 and A7 in the Statistical Appendix. Aggregates exclude

Venezuela.
2 Percent of GDP.
3 Percent. National definitions of unemployment may differ.
4 Puerto Rico is a territory of the United States, but its statistical data are maintained on a separate and independent basis.
5 See the country-specific notes for Argentina and Venezuela in the “Country Notes” section of the Statistical Appendix.
6 Central America refers to CAPDR (Central America, Panama, and the Dominican Republic) and comprises Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras,

Nicaragua, and Panama.

7 The Caribbean comprises Antigua and Barbuda, Aruba, The Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, St. Kitts and Nevis, St. Lucia, St. Vincent and

the Grenadines, Suriname, and Trinidad and Tobago.

8 Latin America and the Caribbean comprises Mexico and economies from the Caribbean, Central America, and South America. See the country-specific notes for Argentina and

Venezuela in the “Country Notes” section of the Statistical Appendix.

9 Eastern Caribbean Currency Union comprises Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines, as well as Anguilla and

Montserrat, which are not IMF members.

International Monetary Fund | April 2025 43

 WORLD ECONOMIC OUTLOOK: A Critical Juncture amid Polic y Shifts

Annex Table 1.1.4. Middle East and Central Asia Economies: Real GDP, Consumer Prices, Current Account Balance, and
Unemployment
(Annual percent change, unless noted otherwise)
Real GDP Consumer Prices1 Current Account Balance2 Unemployment3
Projections Projections Projections Projections
2024 2025 2026 2024 2025 2026 2024 2025 2026 2024 2025 2026
Middle East and Central Asia 2.4 3.0 3.5 14.4 11.1 9.9 2.0 –0.1 –0.4 ... ... ...
Oil Exporters4 2.5 2.6 3.1 8.5 10.3 10.0 4.2 1.4 0.9 ... ... ...
Saudi Arabia 1.3 3.0 3.7 1.7 2.0 2.0 –0.5 –4.0 –4.3 3.5 ... ...
Iran 3.5 0.3 1.1 32.6 43.3 42.5 2.7 0.9 1.3 7.8 9.5 9.2
United Arab Emirates 3.8 4.0 5.0 1.7 2.1 2.0 9.1 6.6 6.4 ... ... ...
Kazakhstan 4.8 4.9 4.3 8.7 9.9 9.4 –1.3 –3.6 –3.7 4.7 4.6 4.6
Algeria 3.5 3.5 3.0 4.0 3.7 3.6 –1.4 –3.9 –4.6 ... ... ...
Iraq 0.3 –1.5 1.4 2.6 2.5 2.7 2.0 1.5 1.5 ... ... ...
Qatar 2.4 2.4 5.6 1.1 1.2 1.4 17.2 10.8 10.3 ... ... ...
Kuwait –2.8 1.9 3.1 2.9 2.5 2.2 29.5 22.7 19.3 ... ... ...
Azerbaijan 4.1 3.5 2.5 2.2 5.7 4.5 7.8 7.8 4.1 5.4 5.3 5.3
Oman 1.7 2.3 3.6 0.6 1.5 2.0 2.2 –1.5 –2.5 ... ... ...
Turkmenistan 2.3 2.3 2.3 4.8 7.0 8.0 3.1 2.0 0.6 ... ... ...
Bahrain 2.8 2.8 3.0 0.9 1.0 1.5 4.9 3.3 1.7 5.9 ... ...
Oil Importers5,6 2.3 3.6 4.1 24.1 12.4 9.7 –3.9 –3.8 –3.5 ... ... ...
Egypt 2.4 3.8 4.3 33.3 19.7 12.5 –5.4 –5.8 –3.7 7.4 7.7 7.7
Pakistan 2.5 2.6 3.6 23.4 5.1 7.7 –0.5 –0.1 –0.4 8.3 8.0 7.5
Morocco 3.2 3.9 3.7 0.9 2.2 2.3 –1.4 –2.0 –2.2 13.3 13.2 12.9
Uzbekistan 6.5 5.9 5.8 9.6 8.8 7.2 –5.0 –5.0 –4.8 5.5 5.0 4.5
Tunisia 1.4 1.4 1.4 7.0 6.1 6.5 –1.7 –2.7 –3.1 ... ... ...
Sudan7 –23.4 –0.4 8.8 176.8 100.0 63.2 –3.5 –3.6 –8.6 60.8 62.0 59.7
Jordan 2.5 2.6 2.9 0.2 3.6 2.6 –5.8 –5.5 –5.8 ... ... ...
Georgia 9.4 6.0 5.0 1.1 3.6 3.2 –4.4 –4.4 –4.7 13.9 13.9 13.9
Armenia 5.9 4.5 4.5 0.3 3.2 3.0 –3.9 –4.5 –4.8 13.0 13.5 14.0
Tajikistan 8.4 6.7 5.0 3.5 4.3 5.5 4.7 0.9 –2.1 ... ... ...
Kyrgyz Republic 9.0 6.8 5.3 5.0 7.0 5.7 –31.1 –8.5 –7.5 4.0 4.0 4.0
Mauritania 4.6 4.4 3.7 2.3 3.5 4.0 –5.8 –5.1 –4.8 ... ... ...
West Bank and Gaza7 ... ... ... 52.9 ... ... ... ... ... ... ... ...
Memorandum
Caucasus and Central Asia 5.4 4.9 4.3 6.7 8.1 7.4 –1.3 –2.0 –2.6 ... ... ...
Middle East, North Africa, Afghanistan, 1.9 2.6 3.4 15.7 11.7 10.3 2.5 0.2 0.0 ... ... ...
and Pakistan6
Middle East and North Africa 1.8 2.6 3.4 14.6 12.7 10.7 2.8 0.3 0.1 ... ... ...
Israel7,8 0.9 3.2 3.6 3.1 2.7 2.0 3.1 2.8 2.9 3.0 2.9 3.2
Source: IMF staff estimates.
Note: Data for some countries are based on fiscal years. Please refer to Table F in the Statistical Appendix for a list of economies with exceptional reporting periods.
1 Movements in consumer prices are shown as annual averages. Year-end to year-end changes can be found in Tables A6 and A7 in the Statistical Appendix.
2 Percent of GDP.
3 Percent. National definitions of unemployment may differ.
4 Includes Libya and Yemen.
5 Includes Djibouti, Lebanon, and Somalia. See the country-specific note for Lebanon in the “Country Notes” section of the Statistical Appendix.
6 Excludes Afghanistan and Syria because of the uncertain political situation. See the country-specific notes in the “Country Notes” section of the Statistical Appendix.
7 See the country-specific notes for Israel, Sudan, and West Bank and Gaza in the “Country Notes” section of the Statistical Appendix.
8 Israel, which is not a member of the economic region, is shown for reasons of geography but is not included in the regional aggregates.

44 International Monetary Fund | April 2025

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Annex Table 1.1.5. Sub-Saharan African Economies: Real GDP, Consumer Prices, Current Account Balance, and Unemployment
(Annual percent change, unless noted otherwise)
Real GDP Consumer Prices1 Current Account Balance2 Unemployment3
Projections Projections Projections Projections
2024 2025 2026 2024 2025 2026 2024 2025 2026 2024 2025 2026
Sub-Saharan Africa 4.0 3.8 4.2 18.3 13.3 12.9 –1.7 –2.5 –2.2 ... ... ...
Oil Exporters4 3.4 2.7 3.1 29.8 23.6 29.5 6.4 3.8 2.7 ... ... ...
Nigeria 3.4 3.0 2.7 33.2 26.5 37.0 9.1 6.9 5.2 ... ... ...
Angola 4.5 2.4 2.1 28.2 22.0 16.4 5.4 2.1 1.4 ... ... ...
Gabon 3.1 2.8 2.6 1.2 1.5 2.0 4.5 2.2 0.6 ... ... ...
Chad 1.5 1.7 3.2 5.7 3.9 3.5 –1.3 –3.4 –2.8 ... ... ...
Equatorial Guinea 1.9 –4.2 0.0 3.2 4.0 3.5 –2.4 –1.7 –2.4 ... ... ...
Middle-Income Countries5 3.1 3.4 3.6 6.4 5.4 4.8 –2.4 –2.5 –2.3 ... ... ...
South Africa 0.6 1.0 1.3 4.4 3.8 4.5 –0.6 –1.2 –1.4 32.8 32.8 32.7
Kenya 4.5 4.8 4.9 4.5 4.1 4.9 –3.7 –3.9 –4.2 ... ... ...
Ghana 5.7 4.0 4.8 22.9 17.2 9.4 1.6 1.6 1.3 ... ... ...
Côte d’Ivoire 6.0 6.3 6.4 3.5 3.0 2.2 –4.2 –3.6 –2.1 ... ... ...
Cameroon 3.6 3.6 4.0 4.5 3.4 3.0 –3.3 –2.8 –3.9 ... ... ...
Senegal 6.7 8.4 4.1 0.8 2.0 2.0 –12.1 –8.2 –6.2 ... ... ...
Zambia 4.0 6.2 6.8 15.0 14.2 9.2 –1.7 0.5 2.6 ... ... ...
Low-Income Countries6 6.0 5.7 6.3 23.3 13.3 7.2 –6.0 –6.5 –5.0 ... ... ...
Ethiopia 8.1 6.6 7.1 21.7 21.5 12.2 –4.2 –4.8 –3.2 ... ... ...
Tanzania 5.4 6.0 6.3 3.2 4.0 4.0 –3.1 –3.0 –2.9 ... ... ...
Democratic Republic of the Congo 6.5 4.7 5.2 17.7 8.9 7.2 –4.1 –2.9 –2.5 ... ... ...
Uganda 6.3 6.1 7.6 3.3 4.2 4.7 –7.3 –6.4 –4.2 ... ... ...
Mali 4.4 4.9 5.1 3.2 3.0 2.0 –6.1 –5.1 –1.6 ... ... ...
Burkina Faso 4.4 4.3 4.5 4.2 3.0 2.5 –6.4 –2.1 –2.0 ... ... ...
Source: IMF staff estimates.
Note: Data for some countries are based on fiscal years. Please refer to Table F in the Statistical Appendix for a list of economies with exceptional reporting periods.
1 Movements in consumer prices are shown as annual averages. Year-end to year-end changes can be found in Tables A6 and A7 in the Statistical Appendix.
2 Percent of GDP.
3 Percent. National definitions of unemployment may differ.
4 Includes Republic of Congo and South Sudan.
5 Includes Benin, Botswana, Cabo Verde, the Comoros, Eswatini, Lesotho, Mauritius, Namibia, São Tomé and Príncipe, and Seychelles.
6 Includes Burundi, Central African Republic, Eritrea, The Gambia, Guinea, Guinea-Bissau, Liberia, Madagascar, Malawi, Mozambique, Niger, Rwanda, Sierra Leone, Togo, and

Zimbabwe.

International Monetary Fund | April 2025 45

 WORLD ECONOMIC OUTLOOK: A Critical Juncture amid Polic y Shifts

Annex Table 1.1.6. Summary of World Real per Capita Output

(Annual percent change; in constant 2021 international dollars at purchasing power parity)
Average Projections
2007–16 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
World 2.0 2.5 2.5 1.8 –3.9 5.6 2.7 2.4 2.7 1.8 2.0
Advanced Economies 0.8 2.1 1.8 1.5 –4.4 5.8 2.4 0.9 1.2 0.9 1.2
United States 0.7 1.8 2.4 2.1 –3.0 5.7 2.0 2.1 1.9 1.2 1.1
Euro Area1 0.4 2.4 1.5 1.4 –6.4 6.3 3.1 –0.1 0.5 0.5 0.9
Germany 1.1 2.3 0.8 0.8 –4.2 3.6 0.6 –1.1 –0.5 –0.2 0.8
France 0.3 2.0 1.3 1.7 –7.8 6.4 2.1 0.8 0.8 0.4 0.7
Italy –0.9 1.8 1.0 0.6 –8.6 9.7 5.2 0.8 0.8 0.5 0.9
Spain 0.0 2.6 1.8 1.1 –11.1 6.5 4.9 1.5 2.2 1.2 0.6
Japan 0.5 1.8 0.8 –0.2 –3.9 3.0 1.3 2.0 0.6 1.0 1.1
United Kingdom 0.4 2.0 0.8 1.1 –10.7 8.3 4.3 –0.9 0.0 0.1 0.6
Canada 0.4 1.8 1.3 0.4 –6.1 5.3 2.5 –1.3 –1.4 0.4 1.6
Other Advanced Economies2 1.9 2.5 2.1 1.3 –2.2 6.0 1.9 0.6 1.7 1.4 1.5
Emerging Market and Developing Economies 3.7 3.3 3.4 2.4 –3.1 5.9 3.1 3.6 3.7 2.7 2.8
Emerging and Developing Asia 6.5 5.6 5.6 4.5 –1.4 7.1 4.1 5.5 4.7 4.0 4.1
China 8.4 6.3 6.4 5.7 2.2 8.5 3.2 5.5 5.1 4.2 4.2
India3 5.4 5.6 5.3 2.8 –6.7 8.8 6.9 8.3 5.5 5.3 5.4
Emerging and Developing Europe 2.1 3.6 3.4 2.3 –1.9 7.5 1.9 3.8 3.7 2.3 2.1
Russia 1.5 1.6 2.7 2.1 –2.5 6.2 –1.1 4.4 4.3 1.8 1.2
Latin America and the Caribbean 1.2 0.3 0.2 –0.9 –8.0 6.6 3.5 1.6 1.6 1.3 1.6
Brazil 1.2 0.7 1.1 0.6 –3.9 4.3 2.6 2.8 3.0 1.6 1.6
Mexico 0.2 0.9 1.0 –1.3 –9.1 5.4 2.9 2.4 0.6 –1.1 0.6
Middle East and Central Asia 1.4 0.0 0.9 0.1 –4.3 2.6 3.2 0.1 4.6 1.1 1.7
Saudi Arabia 0.2 0.8 5.9 1.5 –8.1 7.7 2.8 –5.3 –3.3 1.0 1.7
Sub-Saharan Africa 1.7 0.1 0.6 0.4 –4.3 2.0 1.5 1.0 1.2 1.2 1.5
Nigeria 2.8 –1.8 –0.7 –0.4 –4.3 1.1 0.7 0.3 0.9 0.6 0.3
South Africa 0.6 –0.3 0.0 –1.3 –7.5 3.8 0.7 –0.8 –0.9 –0.5 –0.2
Memorandum
European Union 0.7 2.8 2.1 1.8 –5.7 6.6 3.4 0.1 0.8 0.9 1.3
ASEAN-54 3.6 4.0 3.8 3.2 –5.5 3.3 4.5 3.1 3.6 3.0 3.0
Middle East and North Africa 1.1 –0.5 0.5 –0.3 –4.5 2.8 3.2 0.0 –0.3 0.8 1.6
Emerging Market and Middle-Income Economies 3.9 3.6 3.7 2.7 –2.9 6.6 3.4 4.0 3.6 3.0 3.1
Low-Income Developing Countries 2.8 2.0 2.2 2.5 –2.7 1.7 2.3 1.6 3.0 1.9 2.8
Source: IMF staff estimates.
Note: Data for some countries are based on fiscal years. Please refer to Table F in the Statistical Appendix for a list of economies with exceptional reporting periods.
1 Data are calculated as the sum of those for individual euro area countries.
2 Excludes the Group of Seven (Canada, France, Germany, Italy, Japan, United Kingdom, United States) and euro area countries.
3 See the country-specific note for India in the “Country Notes” section of the Statistical Appendix.
4 ASEAN-5 comprises Indonesia, Malaysia, the Philippines, Singapore, and Thailand.

46 International Monetary Fund | April 2025

 CHAPTER 1 GLOBAL PROSPECTS AND POLICIES

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