IMF boosts global economic growth forecast amid Trump's trade policies

The International Monetary Fund (IMF) announced an upgrade to its economic outlook for the global economy and the United States amid the ongoing trade tensions stemming from U.S. tariffs imposed by President Donald Trump. This upgrade comes as the IMF now predicts a 3% growth rate for the global economy this year, an improvement from the previous forecast of 2.8% from April 2025. With the global growth forecast adjusted downward from 3.3% for 2024, the new projections reflect the IMF's recognition that the adverse effects of Trump's protective tariffs have not been as severe as initially anticipated. The IMF's chief economist, Pierre-Olivier Gourinchas, noted that a gradual easing of trade tensions has provided unexpected resilience across the globe. Specifically, tariffs raised approximately $108 billion for the U.S. Treasury between October and June, nearly doubling the amount generated during the same timeframe the previous year. Despite a forecast for global growth to remain below pre-pandemic levels, the IMF has acknowledged that without the disruption caused by protectionist policies, the economy would likely be experiencing more robust growth rates. Among the various economic forecasts, the Chinese economy is expected to expand by 4.8% this year, which is significantly higher than the previously anticipated 4%. This increased projection is attributed to lower-than-expected tariffs imposed on Chinese imports and increased government spending. An interesting element of this growth comes from pharmaceutical exports from Ireland that surged to avoid expected tariffs on drugs. Conversely, India is anticipated to remain the fastest-growing major economy at a rate of 6.4% for both this year and next. U.S. tariffs on imported goods have put pressure on Japan and the European Union, with Trump seeking to impose additional 15% tariffs unless concessions are made. The IMF has also revised its forecast for trade growth to 2.6% for the current year but warns that the projected higher tariffs could lead to trade growth slowing down to just 1.9% next year. Amid these developments, the IMF continues to advocate for the independence of central banks, especially the Federal Reserve, in navigating the complexities wrought by inflation and the consequences of the trade policies.