IMF raises 2025 global economic growth forecast to 3.3%

By Abubakar Yunusa

The International Monetary Fund (IMF) has raised its growth forecast for the global economy to 3.3 percent in 2025 — up from a 3.2 percent projection in October 2024.

In IMF’s World Economic Outlook (WEO) published on Friday and titled ‘Global Growth: Divergent and Uncertain (January 2025),’ the Washington-based institution said the forecast for this year is holding steady but still below the historical average of 3.7 percent.

“Global growth is projected at 3.3 percent both in 2025 and 2026, below the historical (2000–19) average of 3.7 percent,” the report reads.

“The forecast for 2025 is broadly unchanged from that in the October 2024 World Economic Outlook (WEO), primarily on account of an upward revision in the United States offsetting downward revisions in other major economies.”

IMF explained that global headline inflation is expected to decline to 4.2 percent in 2025 and 3.5 percent in 2026, converging back to the target earlier in advanced economies than in emerging markets and developing economies.

IMF retained its 3.2 percent forecast for Nigeria’s economic growth in 2025.

The institution, however, said that growth in Nigeria is projected to gradually decline in 2026 to 3 percent.

Also, the economic growth forecast for sub-Saharan Africa was retained at 4.2 percent for 2025, with the institution projecting similar growth in 2026.

IMF also highlighted various economic performances across regions, with advanced economies facing slower growth and emerging markets like Nigeria showing relative stability.

The United States economic growth forecast was raised to 2.7 percent in 2025, compared to the 2.1 percent previously projected in October last year.

However, the IMF projected the United States’ economic growth will decline to 2.2 percent in 2026.

“In the Middle East and Central Asia, growth is projected to pick up, but less than expected in October,” the report reads.

“This mainly reflects a 1.3 percentage point downward revision to 2025 growth in Saudi Arabia, mostly driven by the extension of OPEC+ production cuts.

“Growth in sub-Saharan Africa is expected to pick up in 2025, while it is forecast to slow down in emerging and developing Europe.”

IMF offered countries guidance on managing inflation, emphasising that monetary policy should aim to restore price stability while also supporting economic activity and employment.

“In economies where inflationary pressures persist and the risk of unexpected increases is high, a restrictive stance should be maintained until there is clearer evidence that inflation is returning to target sustainably,” IMF said.

“In economies in which activity is cooling fast and inflation is on track to durably go back to target, a less restrictive stance is justified.

“In either case, fiscal policy should consolidate to put public debt on a sustainable path and restore the space needed for more agile responses.”

IMF also stressed the importance of fiscal policy consolidation, recommending that it be aligned with the goal of placing public debt on a sustainable path while creating room for more responsive policy actions.