The International Monetary Fund (IMF) has downgraded its global growth forecast for 2025 to 2.8%, down from its earlier estimate of 3.3%, citing rising geopolitical tensions, higher tariffs imposed by the United States, and tightening financial conditions. The projection for 2024 has also been trimmed to 3% from the earlier 3.3%.
In its latest World Economic Outlook released on Tuesday, the IMF said the global economic system is “being reset,” with the U.S.’s tariff regime playing a significant role in the slowdown. The report notes that the newly imposed trade barriers by the U.S. are weighing on exports and adding to uncertainty across several regions.
A substantial downward revision in Mexico’s economic outlook was one of the biggest drags on the Latin America and Caribbean (LatAm) forecast. Mexico’s GDP is now expected to shrink by 0.3% in 2025, reversing from a previously projected 1.4% expansion. The IMF attributes this sharp cut to weaker-than-expected performance in late 2024 and early 2025, compounded by the impact of U.S. tariffs and overall strained trade ties.
Consequently, the LatAm and Caribbean region is expected to grow only 2.0% in 2025, down from the earlier estimate of 2.5%. Brazil’s outlook was also lowered, with the IMF now expecting 2.0% growth versus 2.2% previously.
Meanwhile, Argentina saw a slight upgrade to 5.5% growth from 5%, while Colombia, Chile, and Peru are expected to grow at 2.4%, 2.0%, and 2.8%, respectively. Central America is projected to grow at 3.8% in 2025, marginally lower than 3.9% in 2024, while the Caribbean’s growth forecast was significantly cut to 4.2% from 12.1% last year.
The IMF noted that growth estimates were reduced for most individual economies globally, amid an increasingly protectionist environment.
