IMF Lifts 2025 Outlook for Emerging Economies, Driven by China and Tariff Relief
The International Monetary Fund (IMF) has raised its 2025 economic growth forecast for emerging and developing markets to 4.1%, up from 3.7%, citing stronger momentum and improved sentiment toward China.
In its latest World Economic Outlook update released Tuesday, the IMF also slightly increased its 2026 forecast for emerging economies to 4.0%, compared to the previous estimate of 3.9%.
China led the upgrades, with its 2025 growth now expected to reach 4.8%, a significant jump from April’s forecast of 4.0%. The IMF credited stronger-than-anticipated activity in the first half of the year and a notable easing in U.S.-China tariffs for the revision. The updated projections reflect an assumed effective U.S. tariff rate of 17.3%, much lower than the 24.4% used in the previous forecast.
The Fund also assumes that recent tariff suspensions will continue beyond their scheduled expirations and that no further hikes will take effect.
Despite China’s solid 5.2% second-quarter growth, warning signs remain as the export-reliant economy navigates a fragile trade environment. Beijing faces an August 12 deadline to finalize a lasting tariff agreement with the U.S., following preliminary pacts earlier this year. Absent a deal, many countries could face new tariff hikes starting later this week. Negotiations are still underway in Stockholm.
The IMF warned that risks to the outlook remain “skewed to the downside”, pointing to the uncertainty surrounding global trade policy. In particular, Brazil’s economy is projected to slow further—expected to grow just 2.3% in 2025, down from 3.4% in 2024—if more U.S. tariffs are imposed.
Globally, the IMF now expects GDP growth to hit 3.0% in 2025 and 3.1% in 2026, modest increases from previous figures but still lower than January’s projections.
While most economies received slight upgrades, Russia and South Korea saw their forecasts downgraded. Russia is now projected to grow just 0.9% in 2025 (down from 1.5%), and South Korea is expected to expand by 0.8%, compared to the earlier forecast of 1.0%.
