IMF Cuts Growth Projections Amid Global Financial Strain

The International Monetary Fund has lowered its 2025 growth forecasts for emerging economies, including Mexico and China. Factors such as tighter funding conditions and reduced development cash threaten these economies. U.S. tariffs and policy uncertainty compound the slowdown, posing challenges for global growth recovery post-pandemic.

The International Monetary Fund (IMF) announced on Tuesday a downward revision of its 2025 growth projections for emerging economies such as Mexico and China. This action highlights concerns that tighter financial conditions and a lack of development funding could challenge these nations significantly.

Moreover, economic policies under the administration of U.S. President Donald Trump, including tariffs, have stymied global growth at a critical recovery point post-COVID-19 pandemic, amid geopolitical tensions like Russia's invasion of Ukraine. According to the IMF's World Economic Outlook, forecasts for emerging markets for this year and 2026 have been reduced to 3.7% and 3.9% respectively, indicating a stark decline from the projected 4.3% growth for 2024.

The IMF also reported that many emerging economies now face tighter fiscal constraints compared to a decade ago, with debt servicing consuming an increasing share of fiscal revenues. Challenges are exacerbated amid scarce international development assistance, necessitating fiscal adjustments with potential adverse impacts on growth and living standards in low-income countries.

(With inputs from agencies.)