IMF Revises Growth Outlook Downward
The International Monetary Fund has sharply reduced itsforecast for global economic growth, now projecting the world economy to expandby just 2.8% in 2025 and 3% in 2026, according to its latest World EconomicOutlook published in April 2025. This represents a significant downgrade fromthe January forecast, which had anticipated 3.3% growth for both years.
The revision comes amid what the IMF describes as"rapid escalation of trade tensions and extremely high levels of politicaluncertainty" that are expected to substantially impact global economicactivity. The organization points to shifting policy priorities amonggovernments worldwide as a key factor behind the changing economic landscape.
Trade Tensions Central to Downgrade
At the heart of the IMF's more pessimistic outlook is therecent surge in protectionist trade measures, particularly those implemented bythe United States and the retaliatory actions from its trading partners. Thereport specifically highlights the introduction of "almost universal UStariffs on April 2," which have pushed effective tariff rates to levelsnot seen in the past century.
The IMF characterizes these tariff increases as "aserious negative shock to growth" in their own right. However, theunpredictable manner in which these measures have unfolded has furthercomplicated economic forecasting, leading the IMF to label its April review asa "reference forecast" based on information available as of April 4,2025.
This baseline projection incorporates the April 2 tariffsand initial reactions from trading partners, but the IMF has also preparedseveral alternative global growth scenarios under different trade policyassumptions, acknowledging the high degree of uncertainty surrounding futuretrade relations.
Regional and Country-Specific Outlooks
While the report provides a broad global outlook, itmaintains specific forecasts for individual economies. For Ukraine, the IMF haskept its growth projections unchanged at 2% for 2025 and 4.5% for 2026,suggesting that the country's recovery trajectory remains on track despite theglobal headwinds.
Inflation Outlook Remains Challenging
Beyond growth concerns, the IMF also notes that global coreinflation is expected to decline somewhat slower than previously anticipated.The updated forecast projects core inflation to reach 4.3% in 2025 and 3.6% in2026, suggesting that price pressures will remain a challenge for policymakersaround the world.
This inflation outlook compounds the difficulties facingcentral banks, which must now navigate the delicate balance between supportinggrowth amid trade tensions and continuing to bring inflation back to targetlevels.
Structural Shifts in Global Trade
The report comes against a backdrop of fundamental changesin the global trading system. IMF Managing Director Kristalina Georgieva haspreviously noted the increasing fragmentation of international trade, withnational security concerns gaining prominence over cost considerations inproduction decisions.
This trend toward "self-sufficiency" represents asignificant shift from the decades-long movement toward greater global economicintegration. The steel industry is specifically mentioned as an example wheresecurity considerations are increasingly favoring local production overimports, regardless of cost differentials.
Alignment with WTO Projections
The IMF's downgraded outlook aligns with recent projectionsfrom the World Trade Organization, which has dramatically revised its forecastfor global merchandise trade in 2025. The WTO now expects trade to contract by0.2%, a stark reversal from its October projection of 3% growth.
This correlation between the IMF and WTO forecastsunderscores the severity of the current trade tensions and their potentialimpact on both economic growth and international commerce.
Implications for the Steel Industry
For the global steel sector, the IMF's downgraded growthforecast presents significant challenges. Steel demand is closely tied toeconomic growth, particularly in construction, infrastructure, andmanufacturing sectors. A slower-growing global economy typically translates toreduced steel consumption.
The specific mention of steel in the context of shiftingtrade priorities is particularly relevant. As countries increasingly prioritizedomestic steel production for national security reasons, the industry may seefurther fragmentation of global supply chains and potentially higher costs forsteel-consuming industries.
Outlook and Uncertainties
The IMF's revised forecast highlights the increasinguncertainties facing the global economy. The organization's decision to presentits April projections as a "reference forecast" rather than a firmprediction underscores the difficulty in making economic projections amidrapidly evolving trade policies.
The range of alternative scenarios prepared by the IMFsuggests that growth outcomes could vary significantly depending on how tradetensions develop. This uncertainty itself may weigh on business investment andconsumer confidence, potentially creating a self-reinforcing negative cycle.
For policymakers, the challenge will be to navigate theseuncertainties while addressing persistent inflation and supporting economicgrowth. The balancing act has become considerably more difficult with theaddition of escalating trade tensions to an already complex global economicenvironment.
Key Takeaways:
• IMF has downgraded its global growth forecast to 2.8% for2025 and 3% for 2026, down from 3.3% for both years
• Escalating trade tensions and political uncertainty arecited as major factors behind the revision
• Recent US tariff measures implemented on April 2, 2025,have pushed tariff rates to levels not seen in a century
• Global core inflation is expected to decline more slowlythan previously anticipated, reaching 4.3% in 2025
• Ukraine's growth forecast remains unchanged at 2% for2025 and 4.5% for 2026
• The IMF notes a trend toward economic fragmentation andprioritization of national security over cost efficiency
• The WTO has similarly downgraded its outlook, nowprojecting a 0.2% contraction in global merchandise trade for 2025
• These developments present significant challenges for thesteel industry, which is sensitive to both economic growth and trade policies
