IMF forecasts lower global growth this year: The International Monetary Fund (IMF) forecasts global growth to log 2.8% in 2025, down 0.5 percentage point from previous estimates, it said in its World Economic Outlook report (pdf). Growth is expected to edge up to 3.0% in 2026, though this remains below the IMF’s earlier projections at 3.3%.

We all know the culprit: The revision is a direct consequence of “new trade measures and their indirect effects through trade linkage spillovers, heightened uncertainty, and deteriorating sentiment.”

Major economies projected to take a hit: The US is now expected to grow 1.8% in 2025, down nearly one percentage point from the previous forecast, as “greater policy uncertainty, trade tensions, and a softer demand outlook” weigh down on consumption. Meanwhile, Japan’s growth was cut by 0.5 points to 0.6%, with tariff concerns expected to offset gains in private consumption and disposable income. The Fund also downgraded its forecast for Canada’s growth by 0.6 percentage points, and for the UK by half a point.

China and India will bear the brunt too: China’s 2025 outlook was cut by 0.6 points to 4.0%, as trade restrictions “offset the stronger carryover from 2024 and fiscal expansion in the budget.” The following year comes with a similar downward revision and growth forecast. Meanwhile, India’s growth was trimmed by 0.3 percentage points to 6.2%.

Across the Atlantic: Growth in the Eurozone is expected to decline “slightly” to 0.8% this year. Still, the IMF projects a stronger growth of 1.2% next year, driven by stronger consumption and rising wages as “debt brake” reforms in Germany spur growth.

Spain is a rare bright spot in the Fund’s updated forecasts, with an upward revision of 0.2 percentage points, leaving 2025 growth forecast at 2.5%. This reflects “a large carryover from better-than-expected outturns in 2024 and reconstruction activity following floods,” the IMF said.

Tariff clouds may turn into showers: Recent waves of US tariffs and the resulting retaliatory measures by China, Canada, and the EU have created “unprecedented” policy uncertainty. This is dragging down global trade volumes, which are now expected to grow just 1.7% in 2025 — a full 1.5 percentage points lower than previous expectations.

A new era: “The increased uncertainty and tightening of financial conditions could well dominate the short term, weighing on economic activity, as reflected in the sharp decline in oil prices,” IMF chief economist Pierre-Olivier Gourinchas said in a blog post. Growth prospects could see immediate improvement, however, if countries managed to move past differences and forge new trade agreements, Gourinchas added.

The inflation outlook Global inflation is expected to decline the next two years, hovering at around 4.3% in 2025 (revised slightly upwards) and at 3.6% in 2026.

MARKETS THIS MORNING-

Asian markets are in the green this morning, after comments from the Donald sparked hopes for tariff de-escalation. Hong Kong’s Hang Seng is leading gains with a 1.8% increase, followed by Japan’s Nikkei at 1.7%. Wall Street futures are also inching up following strong gains yesterday, after Trump denied plans to remove the Fed chief.

THE CLOSING BELL: TADAWUL-

The TASI rose 0.5% yesterday on turnover of SAR 5.4 bn. The index is down 3.7% YTD.

In the green: SFICO (+10.0%), Aljazira Reit (+9.9%) and Alistithmar Reit (+9.9%).

In the red: Jahez (-3.3%), Alandalus (-3.2%) and ACIG (-3.0%).

THE CLOSING BELL: NOMU-

The NomuC fell 1.2% yesterday on turnover of SAR 26.7 mn. The index is down 10.2% YTD.

In the green: Dar Almarkabah (+20.9%), Mayar (+9.7%) and Aljouf Water (+6.0%).

In the red: NBM (-9.4%), Alrazi (-9.1%) and Horizon Food (-9.0%).