IMF Warns of Banking Sector Trouble for Global Economy
The IMF cautioned that banking sector volatility may further dampen global economic growth, with reduced lending potentially impacting GDP.
Published on April 12, 2025
The International Monetary Fund (IMF) has warned that volatility in the banking sector could further complicate an already cooling global economy. The organization noted that global growth is expected to slow to 2.8% in 2025 from 3.4% the previous year. Additionally, U.S. banks may see a 1% decline in lending capacity, which could translate into a 0.44 percentage point reduction in GDP growth.
Recent supplemental reports, including a Reuters update from March 31, 2025, and analysis from City A.M. on October 17, 2024, reinforce these concerns. They highlight that a trail of weaker banks remains susceptible to contagion amid persistent higher interest rates and geopolitical uncertainties. Enhanced financial supervision and timely policy interventions have been underscored as essential countermeasures to mitigate these risks.