IMF releases latest World Economic Outlook report predicts moderate slowdown in global economic growth

Recently, the International Monetary Fund (IMF) released its latest World Economic Outlook report, which pointed out that in the face of significant fluctuations in rules and policies, the global economy achieved a resilient and dynamic start in the first half of this year. However, as the supporting factors behind the resilience performance gradually fade, the current global economy is showing signs of a moderate slowdown in growth, and this trend will continue for the long term. In addition, the development prospects of industries such as artificial intelligence face significant uncertainty and may find it difficult to shoulder the responsibility of driving global economic growth.

The report points out that in the first half of this year, the global economy started well, with active and strong economic activities worldwide, and inflation levels in the United States and Asian economies were also well controlled. The economic resilience in the first half of the year is mainly due to short-term factors. For example, economic activity entities have taken measures such as pre import, investment, and inventory management to cope with the risks of US tariff policies, which does not necessarily represent strong global economic fundamentals. As the short-term factors mentioned above diminish, global economic data is clearly weakening. The global job market is showing signs of weakness, with high tariffs beginning to push up prices for American consumers. Developed economies that have traditionally relied on immigration are experiencing a sharp decline in net labor inflows, which has a negative impact on their economic output.

The report predicts that the global economic growth rate will be 3.2% in 2025 and 3.1% in 2026. Based on year-end data, the global economic growth rate is expected to decline from 3.6% at the end of 2024 to 2.6% at the end of this year.

Although the impact of US tariff policies on the global economy in the first half of this year was smaller than initially expected, the increased policy uncertainty and rising protectionism demonstrated by them are still the main factors leading to a slowdown in growth. The report predicts that the economic growth rate of developed economies will reach 1.6% by 2025. Among them, the growth rate of the US economy will slow down to 2.0%; The growth rate of emerging markets and developing economies will reach 4.2%; The global inflation rate is expected to decrease to 4.2% in 2025 and further decrease to 3.7% in 2026. Among them, the inflation rate in the United States will be higher than the target, while inflation in other countries and regions will remain at a lower level; The global trade volume is expected to achieve an average growth rate of 2.9% by 2025, which is significantly lower than the 3.5% growth rate in 2024. The persistent problem of trade fragmentation will further limit trade revenue.

The report points out that the downside risks currently facing the global economy continue to dominate. Long term policy uncertainty will suppress consumption and investment; The further escalation of trade protectionism measures, including the use of non-tariff barriers, will have negative impacts such as suppressing investment, disrupting supply chains, and curbing productivity growth; The impact of restrictive immigration policies on labor supply will also weaken growth, especially for economies facing population aging and skill shortages; The fragility of fiscal and financial markets will resonate with the risk of rising borrowing and extension costs; The surge in commodity prices caused by climate shocks or geopolitical tensions has brought additional risks, especially for low-income commodity importing countries under immense pressure.

At the same time, there is a risk of fluctuation in the role of the development of the artificial intelligence industry in driving the economy. If its returns and production capacity perform poorly, it will trigger a sharp decline in the stock prices of technology stocks, thereby ending the current growth cycle of artificial intelligence technology investment and the optimistic outlook of the financial market for the industry's prospects. It may even have an impact on macro financial stability. The report warns that the pressure of economic downturn risks on the independence of major economic institutions such as central banks may weaken the credibility of hard won policies and undermine rational economic decisions, including reduced data reliability.

The report points out that policymakers should establish a clear, transparent, and rule-based trade policy roadmap to reduce uncertainty, support investment, and reap the productivity and growth dividends brought by more trade activities. Trade rules should be modernized and upgraded to adapt to the arrival of the digital age and provide opportunities for strengthening multilateral cooperation. Trade diplomacy should be combined with macroeconomic adjustments, which is crucial for correcting persistent external imbalances, addressing their root causes, and ensuring sustained gains.

Rebuilding the fiscal buffer zone and ensuring debt sustainability remain top priorities. The report suggests that the mid-term fiscal consolidation plan should comprehensively consider both reasonable expenditure and revenue generation factors to ensure the practicality and balance of policies. Monetary policy should achieve a balance between maintaining price stability and controlling growth risks. Past experience has shown that efforts to improve policy frameworks have effectively helped emerging economies and developing countries enhance their resilience to risks, and countries should immediately take reform measures to address the emerging global economic situation. We should now focus on promoting structural reforms, boosting growth prospects through measures such as promoting labor mobility, encouraging labor participation, investing in digitalization, and strengthening institutional construction. Industrial policies may play a role in enhancing resilience and growth, but the opportunity costs involved in their use should be fully considered. For low-income countries, mobilizing domestic resources is crucial as external aid decreases. In an era full of uncertainty, scenario rehearsals and policy reserves help ensure timely and effective response measures.