The International Monetary Fund (IMF) has cut its growth projections across the board in response to the trade war sparked by US President Donald Trump’s steep tariffs on virtually all trading partners. In its latest World Economic Outlook, the IMF yesterday warned that the US is confronting an increased risk of recession as it downgraded its outlook for all G7 nations, along with other major economies including China, India, Brazil and South Africa.

The IMF world output in 2025 is projected to grow at 2.8 percentage points less than what was projected in the January projection. It is expected to be 3.0 per cent in 2026, 0.1 point less than the January forecast.

The IMF expects tariffs will cause a broader increase in global prices, slightly raising its outlook for world consumer prices to 4.3 per cent for 2025, and to 3.6 per cent in 2026.