The IMF is upgrading its global economic growth forecast for 2025 and 2026, but the economic rationale for the upward revision preceded the most recent episode of US-China trade tensions.
The IMF, in its latest World Economic Outlook released Tuesday, forecasts the global economy will grow by 3.2pc in 2025 and 3.1pc in 2026. That compares with the 3pc growth for 2025 that the IMF was expecting just three months ago. IMF forecasts are used by many economists, including OECD watchdog the IEA, to model oil demand projections.
"The increase in tariffs and its effect has been smaller than expected so far," IMF chief economist Pierre-Olivier Gourinchas said.
The IMF forecast is based on data available as of late September. In recent days, trade tensions flared up again between the US and China.
The possibility of further escalation in trade tensions across the globe is part of the IMF outlook. "The US statutory effective tariff rate remains high, and trade tensions continue to flare up with no guarantee yet on lasting trade agreements," Gourinchas said.
