IMF upgrades global growth forecast as tariffs ease

The International Monetary Fund (IMF) has predicted stronger global economic growth than it forecast in April in part due to some US tariffs on goods being softened.

A surge in US imports as firms tried to beat impending higher import taxes and actions by some governments to boost growth bumped up its latest forecast.

However, higher tariffs and more uncertainty could lead to weaker growth and slower economic activity, the IMF warned.

Meanwhile, UK growth is predicted to be 1.2% this year, and 1.4% in 2026, unchanged from revised forecasts set out in May.

The UK is set to be the third fastest growing economy out the world’s so-called most advanced economies this year and the next, after US and Canada.

The IMF, which is a group of 190 countries that work together to try to stabilise the global economy, said the upgrade to its global predictions included trade “front-loading” in recent months – referring to the rush of imports into the US.

It forecast global growth of 3% in 2025 and 3.1% in 2026, up from 2.8% and 3% in its April report.

However, that is still below the 3.3% rate it had projected for both years in January, prior to US President Donald Trump taking office, and the pre-pandemic historical average of 3.7%.

American firms rushed products into the country earlier this year to try to get ahead of new taxes on imports pledged by Trump.

The IMF said this created risks that could add to any future economic shocks, including companies, having too much stock, making future imports less necessary.

Also, firms may have to pay more to store goods, and there was also a risk of items becoming obsolete, it said.

Pierre-Olivier Gourinchas, the IMF’s chief economist, said a modest decrease in trade tensions, however fragile, had contributed to the resilience of the global economy.

However, he added: “The world economy is still hurting, and it’s going to continue hurting with tariffs at that level, even though it’s not as bad as it could have been.”

He added that the boost from front-loading is going to “fade away” and it risked being a drag on economic activity in the second half of the year and into 2026.

The IMF said the global pace of price rises was expected to fall to 4.2% in 2025 and 3.6% in 2026.

But it said inflation would probably remain above target in the US as import taxes were passed through to US consumers in the second half of the year.

Trump’s trade policies, which he argues will boost US manufacturing and jobs, have upended global trade.

He brought in a universal tariff of 10% on goods from nearly all countries from April and is threatening higher duties to be imposed from Friday.

Far higher tariffs that the US and China have imposed on each other have been paused until 12 August, with the parties engaged in talks in Stockholm this week.

Steeper tariffs that have been announced on products including cars, steel and other metals, pharmaceuticals and computer chips, have not been included in the IMF forecast.

Trade deals with Japan and the EU have also not been included in the numbers.

“We’ll have to see whether these deals are sticking, whether they’re unravelled, whether they’re followed by other changes in trade policy,” Mr Gourinchas said.