The International Monetary Fund raised its global economic growth forecast for this year, saying US import tariffs have had limited effect so far. But it warns the tariffs and resulting trade tensions still pose significant risks to overall economic stability.
The IMF’s economic outlook released on Tuesday sees the world economy growing 3.2 percent this year. That’s up 0.2 percentage points from its projection in July, but down 0.1 percentage point from last year.
The IMF says inflation and unemployment are rising in the US, and that the adverse effects of trade tariffs are starting to show. It warns risks to growth increase as the global economy becomes more splintered by trade disputes.
The US economy is projected to expand 2 percent, a significant slide from last year’s 2.8 percent. The IMF says this reflects policy uncertainty and slower job growth.
The figure for China is 4.8 percent, down 0.2 points from last year. The IMF says domestic consumption supported by fiscal expansion has helped offset the effects of US tariffs.
Japan’s growth is projected at 1.1 percent, up 1 point from last year, driven by stronger consumer spending. But the IMF notes Japan’s exports fell in sectors hit by US tariffs.
IMF Chief Economist Pierre-Olivier Gourinchas pointed to downside risks beyond tariffs and trade.
He said AI and tech-driven investment is overheating. This, he said, could spur inflation, require tighter central bank policy, and force a repricing across markets.
Gourinchas also noted the rising pressure on central banks to ease monetary policy. He said such a move at the expense of price stability always backfires, whether it be to support economic activity or reduce government debt.
