IMF: Upgrades the 2025 World Development Forecast – Lower in the Eurozone

The International Monetary Fund ( ) has upgraded its forecast for global this year, driven by the strongest of expected demand in the US and slowing down inflation worldwide, which will allow central banks to continue to reduce interest rates. The IMF increased its growth forecast to 3.3% in an update of today’s World Economic Perspectives (17.01.2025), 0.1 percentage point more than its previous forecast in October. It kept the estimate unchanged for 2026 at 3.3%. CORVERSE The improved growth prospects are mainly due to the US, which received the biggest upgrade between major economies in their gross domestic product, which increased by 0.5 percentage points to 2.7%. At global level, however, this is largely offset by the lowest expectations elsewhere, such as in the Eurozone, where growth is expected to accelerate, but at a slower rate than expected in October as it is affected by geopolitical conditions. The downward revision of 0.2% to 1% in 2025 is due to the weak dynamics at the end of 2024 , especially in the manufacturing sector, but also to increased political and political uncertainty explain a In 2026, growth is expected to accelerate to 1.4% , assisted by stronger domestic demand , as financial conditions relax, confidence improves and uncertainty subsides in part. It is noted that the report comes a few days before Donald Trump’s inauguration and does not incorporate his expected financial plans regarding trade, taxation, immigration and regulation. CORVERSE While the IMF said that most policies could be short-term positive for American and global development, they involve some medium-term risks. “Uncertainties are high,” the report states. Extending Trump’s first term tax reliefs, which expire this year, would strengthen production, even with some “positive secondary effects” at global level. However, in the long term this could require greater concessions in fiscal policy “which could become disorganized”. Unregulation could also increase business confidence and encourage investment, strengthening the economy. But “excessive folding” of regulations restricting risk taking and excessive borrowing could favour a dynamic explosion-collapse. Work force disorders from the restriction of migration to the US “may permanently reduce potential production” and increase inflation. With regard to the possible duties that Trump has threatened in several countries and regions, the impact could be more serious than in his first term, with higher expectations of inflation worldwide and many economies “more favourable” for faster inflation now than in 2016.