BEIRUT (Enmaeya News) — In its January 2025 update, the International Monetary Fund (IMF) painted a picture of a global economy facing both subdued growth and persistent challenges. The report forecasts a moderate global expansion at 3.3% for both 2025 and 2026—trailing behind the historical average of 3.7% recorded between 2000 and 2019.
The United States appears to be a notable exception, with its economy expected to surge at a healthy 2.7% in 2025, driven by robust consumption and investment. However, other key regions are not faring as well. The Eurozone is projected to grow at a mere 1.0%, while China’s expansion is slightly higher at 4.6%, though it faces headwinds from a sluggish real estate market and waning consumer confidence.
Inflation trends offer a glimmer of hope, as global inflation is predicted to ease from current levels to 4.2% in 2025, and further down to 3.5% in 2026. Advanced economies are likely to meet their inflation targets sooner compared to emerging markets, although stubborn service sector inflation continues to burden the U.S. and Eurozone. Meanwhile, China benefits from relatively lower inflation pressures.
Monetary policy is diverging among major economies. While many central banks are beginning to ease restrictions, caution remains high due to persistent inflation. The U.S. Federal Reserve is expected to maintain elevated interest rates for an extended period, bolstering the dollar but posing challenges for equity markets in emerging economies, which are already grappling with capital outflows and depreciating currencies.
Trade and geopolitical uncertainties further complicate the global outlook. Heightened protectionist measures, such as increased tariffs, along with escalating tensions in regions like the Middle East and Ukraine, are anticipated to dampen trade growth. This environment of uncertainty is likely to disrupt supply chains and curtail investment over the coming years.
Regionally, the IMF’s revised projections offer a mixed picture. India stands out with a strong growth forecast of 6.5% for both 2025 and 2026, while the U.S. sees an upward revision of 0.5 percentage points thanks to vigorous domestic activity. Conversely, the Eurozone’s performance is expected to be hampered by weak manufacturing and political instability, and Saudi Arabia’s economy is facing a significant downgrade of 1.3% amid OPEC+ oil production cuts.
On the commodities front, oil prices are predicted to drop by 11.7% in 2025 due to reduced demand from China and increased production by non-OPEC+ suppliers. However, food prices are set to climb, spurred by adverse weather conditions impacting major agricultural producers.
The IMF’s outlook underscores the complex interplay of regional dynamics, monetary policy shifts, and global trade challenges, painting a cautiously optimistic yet uncertain economic future for the coming years.