The International Monetary Fund (IMF) has raised its growth forecasts for the global economy, as the numerous U.S. import tariffs have so far not been as severe as feared earlier this year. The outlook for the Netherlands also looks somewhat better again, following a negative adjustment during an IMF research mission to the country in May. However, the IMF remains cautious in its forecast.
The recent trade deal between the U.S. and the EU has not yet been taken into account in the new calculations. The IMF only considered tariffs that are currently in effect. President Donald Trump has also threatened higher tariffs in letters to various countries. Additionally, many countries are still trying to reach a deal with the U.S. How this will exactly play out, the IMF does not dare to say.
For the global economy, the fund is currently forecasting 3 percent growth this year. In April, the IMF had lowered its prediction to 2.8 percent. For next year, the fund now estimates global growth at 3.1 percent, compared to the 3 percent expectation from April. The outlook for the U.S. has also improved. For China, where tariffs have been significantly reduced, the forecast has even increased sharply.
The IMF is expecting growth of 1.2 percent in the Netherlands for both this year and next. This forecast is 0.2 percentage points lower for both years compared to April, but specifically for 2025 it is better than what an IMF delegation stated during a visit to the Netherlands in May.
At that time, growth of only 1.1 percent was projected for this year, with IMF experts pointing to both trade tensions and the disappointing first quarter of the Dutch economy.
IMF Chief Economist Pierre-Olivier Gourinchas, in a commentary on the forecasts, pointed to Trump’s earlier suspension of higher tariffs. With this, he quickly defused the trade war soon after Liberation Day. “This, along with a reduction in trade tensions with China in May, has lowered the effective U.S. tariff rate from 24 percent to about 17 percent.”
Gourinchas warns that although the trade shock now appears less severe than feared, it is still significant. And the damage could still end up being greater. “Tariffs could well rise sharply once the ‘pause’ ends on August 1 or if existing deals fall apart. If this happens, the models suggest that global growth in 2026 would be 0.3 percent lower.”