President Donald Trump’s budget law leads to higher economic growth in the United States, but the country must take into account rising inflation and higher budget deficits. Large blows for the global economy as a result of Trumps trade policy are still not available.
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This is apparent from an estimate that the International Monetary Fund (IMF) published on Tuesday. It is an update of the World Economic Outlookthe half -yearly report on the world economy that appeared in April.
Trump’s recently adopted budget law, containing tax cuts (especially for the rich) and cutbacks, increases the GDP growth, the IMF expects. This is mainly due to expected higher investments by companies that benefit from tax benefits in the law. The fund increases the growth trips for the US economy for this and next year, from 1.8 to 1.9 percent and from 1.7 to 2 percent respectively. Even afterwards, Trumps Tax Act can promote American growth, the fund thinks.
Incidentally, the estimates of the IMF still remain láger for the US than they were before Trump returned to the White House. His import duties inhibit growth; They hunt American companies and consumers, the IMF expects: “The taxes […] Work is expected to gradually continue in consumer prices and will influence inflation in the second half of 2025. ”
In June, American inflation was 2.7 percent on an annual basis – higher than the 2.4 percent of May. To a large extent this was due to more expensive imports, including toys, clothing and interior items. Retail chains such as Walmart already announced in May that they would increase their prices as a result of the import duties.
Inflation in the US, the IMF writes, will “remain above the target level”. The Federal Reserve, the US Central Bank, strives for 2 percent. The FED is under heavy pressure from the White House to lower interest rates despite the considerable inflation risk. The FED board will hold an interest meeting on Wednesday. Pierre-Olivier Gourinchas, chief economist of the IMF, insisted in a press conference on the importance of the independence of central banks.
Insecurity
Trumps Budget Act does not make the US state finances better. The law “contributes to the uncertainty” about its sustainability, the fund believes. The American budget deficit estimated by the IMF in 2026 runs from 5.5 to 7 percent due to the law. This gap is made up for around half by extra income from Trumps input taxes, the fund notes. A similar picture will apply for the coming years. According to recent research by the Yale University, the US national debt threatens to explode Trumps budget policy: from around 122 percent of GDP to 186 percent in 2055.
The Trump effect also feels the rest of the world economy. The trade tensions and the uncertainty that results from it draw a substitution on investments and consumption. In his January estimate (the last pre-trump), the IMF still expected the world economy to grow by 3.2 percent this year. That figure was considerably reduced in April, to 2.8 percent. Now that estimate is being raised again, to 3 percent, but according to the IMF this is mainly because companies anticipated a trade war in the first quarter. “There was a revival in export from Europe and Asia to the US, to be ahead of the taxes,” said Gourinchas.
Various economies of trade deals also closed with the Americans, but they can also “fall apart,” Gourinchas said. He emphasized the enormous uncertainty with which the youngest estimate is surrounded. For example, an upgrading of the growth rognosis of China (from 4 to 4.8 percent in 2025) is largely due to the file in the trade war between the US and China, which will expire in a few days.
By historical standards, 3 percent growth for the world economy is low anyway. The average annual growth in the period 2000-2019 was 3.7 percent.
The economy of the eurozone continues to perform lean. The IMF increased its growth forecast for this year, from 0.8 to 1 percent. Next year the fund will provide 1.2 percent growth in the eurozone. India steams with 6.4 percent growth.