After enduring a prolonged and unprecedented series of shocks, the global economy appeared to have stabilised, with steady yet underwhelming growth rates, the International Monetary Fund (IMF) said in its latest World Economic Outlook, released for the joint IMF, World Bank spring meeting on April 23.

However, the landscape has changed as governments around the world reorder policy priorities and uncertainties have climbed to new highs. Forecasts for global growth have been revised markedly down compared with the January 2025 World Economic Outlook (WEO) Update, reflecting effective tariff rates to levels not seen in a century and a highly unpredictable environment. Global headline inflation is expected to decline at a slightly slower pace than what was expected in January.

The global economy is expected to slow to 2.8% year on year in 2025 but avoid a recession. The advanced economies will expand by 1.4% and the emerging markets by 3.7%, according to the IMF. Germany will be the only major European economy to fall into recession again for the third year in a row, while the BRICS nations will all continue with robust growth, except South Africa, which is suffering from an ongoing energy crisis. (China: 5%; India: 6.5%; Russia: 4.1%; Brazil: 3.4%; South Africa: 0.6%).

Intensifying downside risks dominate the outlook, amid escalating trade tensions and financial market adjustments. Divergent and swiftly changing policy positions or deteriorating sentiment could lead to even tighter global financial conditions. Ratcheting up a trade war and heightened trade policy uncertainty may further hinder both short-term and long-term growth prospects. Scaling back international cooperation could jeopardise progress toward a more resilient global economy.

At this critical juncture, countries should work constructively to promote a stable and predictable trade environment and to facilitate international cooperation, while addressing policy gaps and structural imbalances at home. This will help secure both internal and external economic stability. To stimulate growth and ease fiscal pressures, policies that promote healthy ageing and enhance labour force participation among older individuals and women could be implemented, as discussed in Chapter 2. Additionally, productivity growth can be fostered with better integration of migrants and refugees and mitigation of skill mismatches, as detailed in Chapter 3.

The estimates and projections in the April 2025 WEO Chapter 1 and Statistical Appendix are based on statistical information available through April 14, 2025, but may not reflect the latest published data in all cases.

This article first appeared as an IMF blog here.

Sign up to receive the IMF blog here.