The IMF's October 2025 World Economic Outlook reports a fragile global recovery, with growth slowing from 3.3% in 2024 to 3.2% in 2025 and further to 3.1% in 2026, amid rising trade tensions and policy uncertainties.

Trade tensions, notably US tariffs earlier in 2025, have significantly dampened growth projections, though some mitigation has occurred through new trade deals and containment efforts.

The US economy is decelerating, with growth revised down from 2.8% in 2024 to 2% in 2025, driven by a weakening labor market, persistent inflation, and market disruptions.

Emerging markets show resilience thanks to better policy credibility, yet weaker frameworks pose risks of larger shocks, especially if monetary tightening is delayed amid ongoing inflation.

The outlook highlights four major downside risks: speculative AI valuations, vulnerabilities in China's property and debt sectors, limited fiscal space globally, and political pressures on central banks that could threaten monetary stability.

Global growth remains heavily dependent on easy financial conditions, a weaker dollar, fiscal stimulus, and AI investments, which mask underlying vulnerabilities.

Structural challenges such as aging populations, productivity gaps, and institutional weaknesses threaten long-term growth, with the global outlook at its lowest in decades over the next five years.

World trade volume is expected to grow only 2.9% from 2025 to 2026, reflecting reduced demand and protectionist trends, with stronger regional growth in Africa and India but challenges in China and Latin America.

The IMF stresses the importance of credible, transparent policies, restoring fiscal discipline, supporting innovation, and strengthening institutions to enhance resilience in a complex, uncertain economic environment.