The world economy will grow faster than expected after the impact of Donald Trump’s tariff war waned and imports to the US surged, new projections show.
The British economy could experience a small boost, with the International Monetary Fund (IMF) upgrading its growth predictions by just 0.1 per cent for 2025. Growth is expected to sit at 1.2 per cent this year and 1.4 per cent for 2026, according to the organisation’s latest World Economic Outlook forecasts.
It came as the IMF said the global economy would be more resilient than it expected in May. Global growth is set to be 3 per cent this year and 3.1 per cent next year, up from 2.8 per cent and 3 per cent respectively.
Like Britain, Germany and Italy have both had their growth upgraded by 0.1 per cent for 2025. However, both have received no upgrade for 2026. Meanwhile, Canada was handed a marginally bigger upgrade of 0.2 per cent in 2025 and 0.3 per cent in 2026, taking its growth to 1.6 per cent in 2025 and 1.9 per cent in 2026.
Rachel Reeves has been accused of talking down the economy (PA Wire)
The world growth upgrade reflects what the IMF called “front-loading”, with countries rushing to ship goods to the US to get ahead of Mr Trump’s tariffs.
This has happened as businesses and households tried to prepare for planned increases following Mr Trump’s “liberation day” announcements in April, according to the report.
The IMF said front-loading had “shaped economic activity in the first half of the year”, adding that it was “creating exposures that could amplify the impact of any potential negative shocks”.
For example, firms could end up having too much stock, therefore pushing down future imports, or it could lead to additional holding costs or the risk of items becoming obsolete.
Meanwhile, the growth upgrade since April was also driven by US tariffs being lowered since higher rates were first announced by Mr Trump, alongside improved conditions in the financial markets.
This came after the US struck new trade deals, including one with the UK and, most recently, the EU. However, the chancellor, Rachel Reeves, faces tough questions over why the UK’s growth rate continues to flatline while other economies benefit from the US trade deals.
The IMF said trade deals between the US and partners had softened the impact of Donald Trump’s tariffs (AFP/Getty)
The chancellor has been accused of stalling growth, with critics pointing to her so-called “doom and gloom” attitude towards the UK economy and last year’s tax-heavy October Budget.
She has a multi-billion-pound black hole to fill ahead of this autumn’s Budget and is considering a range of potential tax hikes and spending cuts to balance the country’s books.
The Conservatives said that under Labour “growth is going nowhere”, adding that the IMF report confirms that.
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