The IMF is taking a slightly more upbeat view of the prospects for the global economy, revising upward its expectations for the US economy.
But IMF officials are warning about the potential for higher inflation in the US if president-elect Donald Trump follows through with his threats to impose broad tariffs on all US imports from Canada, Mexico and China.
"Higher tariffs or immigration curbs will play out like negative supply shocks, reducing output and adding to price pressures," IMF head of research Pierre-Olivier Gourinchas said.
In an update to its World Economic Outlook released today, the IMF projected the global economy will grow by what it called a "stable, albeit lackluster rate" of 3.3pc this year and again by 3.3pc in 2026.
The IMF's new 2025 outlook is 0.1 percentage points higher than its 3.2pc forecast in its October report.
The IMF expects the US economy, spurred by continued strength in domestic demand, to grow by 2.7pc this year, a 0.5 percentage point increase from its forecast in October.
China's economy is projected to grow by 4.6pc this year, up by 0.1 percentage point from the IMF's October forecast. The euro area is expected to grow by 1pc.
Last year, the world economy grew by an estimated 3.2pc, compared with 3.3pc in 2023, the IMF said.
IMF forecasts are used by many economists, including at the Paris-based energy watchdog IEA, to model oil demand projections.
Global inflation is expected to decline to 4.2pc this year and 3.5pc in 2026, with pricing pressures easing in advanced economies more quickly than in emerging and developing economies.
Gourinchas noted that while it is difficult to quantify the effects of the policy changes Trump has vowed to implement, "they are likely to push inflation higher in the near term" relative to the IMF's baseline. Looser fiscal policy or deregulation would stimulate demand and increase inflation, as spending and investment rise.
"A combination of surging demand and shrinking supply would likely reignite US price pressures, though the effect on economic output in the near term would be ambiguous," Gourinchas said.
IMF executive director Kristalina Georgieva and other economists have warned in recent years about the rising tide of protectionist measures implemented by the advanced economies, including the US and the EU.
A recent IMF forecast scenario that involves a trade war between the US, Europe and China would reduce the global and US GDP annual growth forecast by 0.5 percentage points in 2025-30, with smaller effects in the eurozone and China.
That scenario did not account for a possible trade war between the US and its immediate neighbors, which also has the potential to disrupt an integrated North American energy market.