IMF Bullish on 2025-2026 Growth: Global Economy Set to Defy Expectations

The IMF just upgraded its crystal ball—and Wall Street's sweating.

Growth engines firing

After years of doomscrolling through recession predictions, the IMF's latest outlook shows green shoots for 2025-2026. Their economists must've found the Ctrl+Z key on those pandemic-era forecasts.

Numbers don't lie (but economists do)

While the suits in D.C. won't release specific figures until Q3 reports drop, the upward revision suggests someone finally told central bankers that 'transitory inflation' wasn't a Halloween costume.

Crypto implications?

Risk-on assets could ride this wave—if TradFi doesn't screw it up with another 'unexpected' liquidity crisis. After all, nothing boosts crypto like institutional FOMO wrapped in economic optimism.

Closing thought: The IMF being optimistic is like your crypto bro friend saying 'trust me'—history suggests caution, but damn if those green candles don't look tempting.

Gourinchas asks Trump’s administration to steer clear of the Fed

The IMF Chief Economist subtly asked Trump’s administration not to interfere with the Fed’s independence, claiming it could cause financial, macroeconomic, and monetary volatility. However, he pointed out that reducing tariffs from 24% to 17% on U.S. imports could ease tariff-related pressure.

Gourinchas also said companies that had stocked and hoarded imports ahead of the implementation of tariffs played a critical role in boosting this year’s projected economic growth. However, TRUMP insists that cutting the Fed rates to 1% can improve the country’s economic growth. The angered U.S. president recently called the Fed Chair, Jerome Powell, a “numbskull.” Trump argued that the current high lending rates (4.25%-4.5%) increased the government’s refinancing cost by “hundreds of billions of dollars.” 

“Without comprehensive agreements, the ongoing trade uncertainty could increasingly weigh on investment and activity.”

–Pierre-Olivier Gourinchas, Chief Economist at the IMF

Gourinchas also warned that an intensified attack on the Federal Reserve could “worsen the situation.” He pointed out the importance of upholding the Fed’s independence, adding that central banks were essential for economic stability and anchoring inflation. The economist further highlighted the “soft landing” by the world’s central banks as one of the key reasons these institutions needed to remain credible. The pursuit of price stability required a great deal of independence. 

IMF breaks down global growth projections

The IMF estimated that developing and emerging economies would grow by 4.1% in 2025, an increase of 0.4 percentage points from April’s estimates. Advanced economies were expected to grow by 1.5%, up from the 1.4% estimation in April. Growth forecasts for Mexico, the U.S., Britain, China, Canada, Brazil, Nigeria, Japan, Saudi Arabia, and the Euro Area were upgraded.

Gourinchas said this resilience was welcome, as the impact of trade shocks was less severe than previously feared. However, he mentioned that risks posed by the slow development of trade talks around Trump’s tariffs still caused uncertainty. The IMF also asserted that economic policy uncertainty remained high for 2025 and 2026.

The IMF economist urged countries to reduce policy-related uncertainty and promote more transparent and clear international trade frameworks. He emphasized that “pragmatic cooperation” was “paramount,” especially since international trade rules were dysfunctional. Overall, Gourinchas believes that geopolitical tensions and fiscal vulnerabilities could also be “precarious” to the “equilibrium” of stances in trade policy.

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