World Economic Outlook April 2025
Global Growth Under Pressure: Trade Tensions, Demographic Challenges, and Migration Policy Shifts

Introduction

The World Economic Outlook (WEO) report issued by the International Monetary Fund (IMF) in April 2025 comes at a time of fast-moving global developments. Following a relatively stable but underwhelming global economic performance in 2024, the early months of 2025 have seen major disruptions. Escalating trade tensions especially after the United States introduced sweeping tariff measures combined with a backdrop of political uncertainty, demographic shifts, and changing migration policies, have deeply reshaped the global outlook.

This edition of the WEO analyzes the evolving global economic landscape across three main axes:

• The current macroeconomic outlook amidst rising protectionism and uncertainty.
• Demographic trends and their implications for medium- and long-term growth prospects.
• Shifts in migration policies and their disproportionate impact on emerging markets and developing economies.

The sections below summarize the report s key findings, organized logically by topic.

Executive Summary: A Shift Toward Fragile Global Prospects

Since January 2025, the global economy has been hit by unexpected shocks:

• On April 2, 2025, the United States implemented near-universal tariffs, pushing effective tariff rates to their highest levels in over a century (see Figure ES.1). This was followed by retaliatory measures from major trading partners.

As a result, global growth projections have been revised downward. According to the updated reference forecast (based on data available as of April 4, 2025):

• Global growth is projected to fall to 2.8% in 2025 and 3.0% in 2026, down from 3.3% for both years in the January 2025 update.
• Growth in advanced economies is expected to decline to 1.4% in 2025, with the United States slowing sharply to 1.8%.
• Emerging market and developing economies are projected to grow at 3.7% in 2025.

Inflation is expected to decline more slowly than previously anticipated, reaching 4.3% globally in 2025 and 3.6% in 2026.

Risks have shifted decisively to the downside:

• Trade tensions, weakening fiscal buffers, and demographic pressures could amplify existing vulnerabilities.
• There is an increasing risk of global financial instability, escalating debt crises, and rising social unrest due to the prolonged cost-of-living crisis.
• The resilience of many emerging markets may be tested under tighter global financial conditions.

On the positive side, a de-escalation in trade conflicts and a renewed commitment to multilateralism could help restore stability and support growth.

Chapter One: Global Outlook Growth, Inflation, and Risk Balances

1.1 Recent Developments and Outlook

The new reference forecast paints a bleak picture:

• Global growth is projected to remain below the historical average of 3.7% (2000 2019).
• Advanced economies, particularly the United States and the Euro Area, are expected to slow significantly.
• China, hit hard by tariff measures, is projected to continue slowing.
• Commodity prices, particularly for energy and food, remain volatile due to trade frictions and geopolitical tensions.

Inflation trends:

• While disinflation continues, inflation remains persistently high in many advanced economies.
• Service prices continue to rise strongly, with a notable divergence between goods and services inflation.

1.2 Key Risks

The report identifies several layers of downside risks:

• Trade wars: Higher tariffs may disrupt global supply chains and damage investment sentiment.
• Policy fragmentation: Divergent monetary, fiscal, and regulatory stances could trigger capital flow reversals and exchange rate volatility.
• Debt pressures: Tighter global financial conditions increase the likelihood of sovereign debt crises in heavily indebted economies.

1.3 Policy Recommendations

• Monetary policy should remain focused on achieving price stability.
• Fiscal policies must aim for credible medium-term consolidation to restore fiscal space.
• Structural reforms are essential to revive productivity growth.
• Multilateral cooperation is crucial to reduce fragmentation and restore stability in global trade systems.

Chapter Two: Demographic Shifts and Their Economic Implications

2.1 Population Trends and Demographic Divergence

The global demographic structure is undergoing profound changes:

• Population aging in advanced economies (e.g., Japan, Germany, and Italy) threatens potential GDP growth, labor supply, and fiscal sustainability.
• Younger societies in Sub-Saharan Africa and South Asia present demographic opportunities, but require significant investments in education and healthcare to realize their potential.

Key findings:

• By 2050, advanced economies will face a significant decline in working-age populations.
• The dependency ratio (non-working to working population) is set to rise sharply in aging societies.

2.2 Economic Effects

• Slower labor force growth will reduce potential GDP growth.
• Savings investment imbalances may widen, affecting capital flows globally.
• Fiscal pressures will rise due to healthcare and pension spending.

2.3 Recommended Policies

To confront demographic challenges:

• Labor market reforms are needed to boost participation rates, especially among women and older workers.
• Productivity enhancement through digitization and innovation should be a top priority.
• Well-managed migration policies can help offset labor shortages in aging economies.

Chapter Three: Migration Policy Shifts and Global Economic Impacts

3.1 Migration Policy Changes in Destination Countries

Many advanced economies have recently tightened their migration regimes:

• Stricter border controls and tougher visa systems have been implemented in the US and parts of Europe.
• Migration policies are increasingly shaped by political considerations rather than economic necessity.

3.2 Indirect Impacts on Emerging and Developing Economies

• Remittance risk: Many developing countries rely heavily on remittance inflows, which could decline due to migration restrictions.
• Worsening brain drain: Restrictive policies do not eliminate migration pressure but instead push skilled workers toward informal or unsafe routes.
• Labor supply shortages: Tight policies in aging economies may worsen labor deficits, further dampening growth.

3.3 Policy Recommendations

• Destination countries should adopt balanced migration policies that address security concerns while retaining migrants' economic contributions.
• Origin countries must invest in human capital and create local opportunities to mitigate migration pressure.

Migration can be a win-win strategy supporting growth in advanced economies while providing vital income to developing countries if managed strategically and responsibly.

Conclusion: Navigating a More Complex and Risk-Prone Global Landscape

The April 2025 WEO presents a world facing unprecedented uncertainty. Trade protectionism, demographic transitions, and changing migration policies are converging into a fragile environment for global growth.

Key priorities moving forward include:

• Restoring global trade stability through trade de-escalation and renewed commitment to rule-based multilateral systems.
• Reviving growth engines via investment in human capital, infrastructure, and innovation.
• Enhancing multilateralism to address shared challenges in financial stability and migration.
• Proactively managing demographic and migration trends to leverage opportunities and mitigate risks.

Countries that act quickly to rebuild fiscal buffers, implement structural reforms, and engage in international cooperation will be better prepared to navigate the volatile years ahead.

Egypt in the Middle East and North Africa Context: Challenges, Opportunities, and Policy Outlook

Egypt s Economic Position in MENA

Egypt stands as one of the largest economies in the Middle East and North Africa in terms of population, labor force, and regional trade weight. Amid ongoing structural transformations and external shocks including trade protectionism, demographic shifts, and monetary tightening Egypt s strategic role in regional stability and growth becomes increasingly vital.

Current and Projected Economic Performance

• Egypt recorded an estimated 2.4% growth in 2024, with IMF projections pointing to an acceleration to 3.6% in 2025 and 4.1% in 2026.
• Growth is supported by domestic factors such as ongoing economic reforms, large-scale national projects, and improved tourism and investment inflows, despite inflationary pressures and external risks.

Regional and Global Influences on Egypt

1. Global Trade Tensions
   → May lead to reduced FDI inflows to emerging markets including Egypt and slower global trade. Egypt must therefore enhance non-traditional competitiveness and diversify export markets.
2. Global Financial Tightening
   → Higher international interest rates increase Egypt s borrowing costs, challenging its development financing and fiscal balance. Maintaining the attractiveness of local debt instruments and ensuring monetary stability becomes crucial.
3. Demographic Transitions
   → Unlike aging regional peers, Egypt has a large youth base. With the right investments in education, training, and job creation, this demographic dividend could become a major growth driver.
4. Migration Policy Shifts
   → Stricter migration regimes in developed countries may reduce remittance inflows, affecting Egypt s balance of payments and household incomes. Egypt must strengthen domestic employment and reduce reliance on remittances.
5. Commodity Price Volatility
   → As a net importer of energy and food, Egypt is vulnerable to global price spikes. This underscores the need for enhanced food security policies and diversification of energy sources.

Egypt s Structural Challenges

• Current account deficit and debt sustainability: Egypt must implement gradual, credible fiscal consolidation while maintaining acceptable growth rates.
• Regional and social disparities: The country must promote inclusive economic policies to bridge urban rural and socio-economic divides.
• Business climate improvement: Accelerate efforts to remove bureaucratic barriers and protect investor rights.
• Digital and innovation infrastructure: Modernize to benefit from rapid technological change and attract quality investment in the digital economy and renewable energy.

Policy Recommendations for Egypt

1. Monetary Policy
   • Ensure price stability through effective liquidity management and inflation targeting.
   • Maintain exchange rate flexibility while avoiding excessive volatility.
2. Fiscal Policy
   • Implement gradual consolidation that protects growth and includes social safety nets for vulnerable groups.
   • Broaden the tax base and improve compliance to sustainably boost revenue.
3. Labor Market Policies
   • Launch intensive technical and vocational training programs aligned with market needs especially in technology, logistics, and renewables.
   • Foster entrepreneurship and support SMEs.
4. Trade and Investment
   • Accelerate export market diversification, particularly toward African and Arab regions.
   • Improve the investment climate and expedite trade agreements with major partners.
5. Food and Energy Security
   • Invest in smart agriculture and expand strategic commodity storage.
   • Accelerate expansion of solar and wind energy to reduce import dependency.
6. Governance and Transparency
   • Uphold good governance principles across public and private sectors.
   • Enhance financial and statistical disclosure in line with international best practices.

Conclusion

Egypt stands at a pivotal moment. Despite mounting global challenges, it holds a historic opportunity to strengthen its economic position in the MENA region. By adopting flexible and well-calibrated monetary and fiscal policies, investing in human capital and modern infrastructure, and promoting economic diversification, Egypt can achieve strong, inclusive, and resilient growth, while safeguarding macroeconomic stability and building resilience against external shocks.

---