IMF World Economic Outlook: High Economic Uncertainty Surpassing COVID-Era Levels

The International Monetary Fund (IMF) has recently published its World Economic Outlook (WEO).

About International Monetary Fund (IMF)

• The IMF is a global organization that promotes economic stability and cooperation among its 190 member countries
• It was established in 1944 in the aftermath of the Great Depression of the 1930s
• Key Reports: Global Financial Stability Report and World Economic Outlook

About World Economic Outlook (WEO)

• The World Economic Outlook (WEO) is the flagship report of the International Monetary Fund that analyzes global economic developments, prospects, and policy challenges. 
  • It offers economic forecasts and serves as a key tool for global economic surveillance and policy coordination.
  • It is usually published twice a year in the months of April and October, with updates in between.

Key Findings of the World Economic Outlook

• Rising Uncertainty: The IMF identifies rising unpredictability as the dominant threat.
  • The IMF’s World Trade Uncertainty Index is now 7 times higher than it was in October 2024.
• Global Economic Growth Forecasts Downward: The IMF has lowered its global growth projections due to rising uncertainty. 
  • According to the Fund’s report, World GDP will grow by 2.8% in 2025 and 3.0% in 2026.
• Euro Area Growth: The euro area is expected to struggle more than the global average. Growth is forecast at just 0.8% in 2025 and 1.2% in 2026.
• Tariffs As Disruptors: Unpredictable tariff policies have replaced COVID-19 as the main disruptor. On 2 April 2025, the US imposed the largest tariff increase in modern history, starting the spiral.
  • Tariff war has again revived global supply chain disruptions witnessed during the Covid times.
• Status of US Government Bonds: Investors are pulling away from traditional “safe” US assets. The price of US bonds has fallen and investors are now dumping U.S. bonds, no longer viewing them as safe.
• Growth forecast of China and US: The IMF has downgraded China’s 2025 GDP forecast to 4.0% (from 4.6% in January), while the US growth estimate has been cut by 90 basis points to 1.8%.

World Economic Outlook (April 2025) Regarding India

• India to Remain Fastest-Growing Major Economy: The IMF forecasts India’s GDP growth at 6.2% in 2025 and 6.3% in 2026, ahead of global and regional counterparts.
  • India’s growth resilience highlights its sound macroeconomic foundation amid global volatility.
• Slight Downward Revision in Forecast: The April 2025 update reflects a modest dip compared to the January 2025 forecast, primarily owing to intensifying global trade tensions and uncertainty.