Raises 2025 global growth forecast to 3.0% from 2.8% in April; lifts 2026 forecast to 3.1% from 3.0%Growth activity points to distortions from tariffs rather than underlying robustnessGlobal headline inflation seen falling to 4.2% in 2025 and 3.6% in 2026Risks to outlook include higher tariff rates, geopolitical tensions, larger fiscal deficits, volatile financial marketsU.S. effective tariff rate underlying projections is 17.3% vs 24.4% in April; tariff rate for rest of world is 3.5% vs 4.1%Tariffs expected to pass through to U.S. consumers and hit inflation in second half of 2025; more subdued in other large economiesU.S. tax cut/spending law to increase fiscal deficit by 1.5 percentage points, with tariff revenues offsetting about halfRaises China 2025 growth forecast by 0.8 percentage point to 4.8%, lifts 2026 forecast by 0.2 percentage point to 4.2%Revises U.S. growth forecast for 2025 up by 0.1 percentage point to 1.9%, lifts 2026 forecast by 0.3 percentage point to 2%Lifts forecast for 2025 world trade growth by 0.9 percentage point to 2.6%; cuts 2026 forecast by 0.6 point to 1.9%Elevated economic uncertainty and volatility require clear messaging from central banks and protection of independenceRaises Euro area growth forecast by 0.2 percentage points to 1.0% in 2025 from April; leaves 2026 forecast unchanged at 1.2%Gournichas: Weakening central banks’ credibility could unleash concerns about controlling inflation, instabilityRaises emerging market and developing economies’ 2025 GDP growth forecast to 4.1% from 3.7% in previous update; 2026 forecast to 3.1% from 3.0%Now sees Mexico’s economy grow 0.2% this year from prior view of 0.3% contractionSo what is the general gist from the IMF?It has raised its 2025 global growth forecast to 3.0% (from 2.8%) and its 2026 outlook to 3.1% (from 3.0%), though it notes that current activity reflects tariff-related distortions more than real strength. Global inflation is projected to ease to 4.2% in 2025 and 3.6% in 2026. Risks include higher tariffs, geopolitical tensions, fiscal deficits, and market volatility. The U.S. effective tariff rate is now seen at 17.3% (down from 24.4%), with tariffs expected to lift U.S. inflation in late 2025. Fiscal deficits will rise due to tax cuts and spending, with tariff revenues offsetting about half the increase. Growth forecasts were raised for the U.S. (2025: 1.9%, 2026: 2.0%), China (2025: 4.8%, 2026: 4.2%), the Euro area (2025: 1.0%), and emerging markets (2025: 4.1%). Global trade growth is seen rising to 2.6% in 2025, then slowing to 1.9% in 2026. The IMF urges clear central bank communication and warns against weakening their credibility, which could trigger inflation fears and financial instability. This article was written by Greg Michalowski at investinglive.com.