The International Monetary Fund (IMF) has sharply reduced its global economic growth forecast for 2025, citing the disruptive effects of U.S. President Donald Trump’s newly implemented tariff policies.

According to the latest update released on Tuesday (April 22, 2025), the IMF now projects the global economy to expand by only 2.8% this year, which is 0.5 percentage points lower than its previous forecast published in January.

The IMF highlighted that rising protectionism, particularly from the world’s largest economy, is creating ripple effects across supply chains, trade flows, and investment decisions globally. Trump’s tariffs have triggered retaliation from major trading partners, further escalating uncertainty in international markets.

The report emphasized that the U.S. economy itself will also face slower growth than previously anticipated. The IMF revised the U.S. growth projection to 1.6%, down from the earlier estimate of 2.2%. It warned that higher tariffs would weigh on consumer spending, corporate investments, and overall market confidence.

Emerging economies, particularly those heavily reliant on exports, are expected to feel the pinch more acutely. Countries like Mexico, Canada, China, and Germany are likely to face stronger headwinds, given their close trade links with the U.S.

Kristalina Georgieva, Managing Director of the IMF, stated, “Trade tensions are inflicting real damage on the global economy, and urgent international cooperation is needed to address these challenges.”

While the IMF acknowledged that some sectors like domestic services might remain resilient, it stressed that manufacturing industries worldwide were already showing signs of slowdown due to disrupted global trade.

The revised projections have increased fears of a synchronized slowdown across both advanced and developing economies. Analysts say that unless tensions ease, the world may struggle to sustain even modest growth rates in the coming quarters.

Meanwhile, financial markets responded with caution. Global stock indexes saw minor declines following the announcement, reflecting investor anxiety over slower economic momentum.

Policymakers around the world are now under pressure to adapt to this changing economic environment. Many are considering fiscal stimulus packages and monetary easing to cushion the impact of weaker trade and investment.

The IMF concluded its report by urging countries to resist protectionism, rebuild trust in multilateral systems, and undertake reforms to boost productivity and economic resilience.