US President Donald Trump’s sharp increases in tariffs have sparked global uncertainty, weakening the world economy and pushing up inflation. The International Monetary Fund (IMF) warned that these tariffs will slow down global growth but not cause a worldwide recession.
In its latest projections, set to be released next week, the IMF expects global economic growth to slow due to US tariffs, which are part of the “reboot” of the global trading system. This has caused turbulence in financial markets, particularly on Wall Street, where stock prices have experienced wild swings.
The IMF’s Managing Director, Kristalina Georgieva, stated that trade distortions and tariff barriers have led to negative perceptions of a multilateral system, creating feelings of unfairness among some countries. She emphasized that tariffs cause uncertainty, which can be costly, particularly due to the complexity of global supply chains.
Increased trade barriers also tend to immediately impact growth, leading to more domestic production but taking time to implement. The IMF forecasts the world economy to grow 3.3% this year and next, up from 3.2% in 2024, with global inflation expected to fall from 5.7% in 2024 to 4.2% this year and 3.5% in 2026.
However, a recent blog post by the IMF’s chief economist, Pierre-Olivier Gourinchas, contradicts these forecasts, suggesting that Trump’s policies are likely to push inflation higher in the near term.
Source: https://apnews.com/article/global-economy-tariffs-imf-d15febaaaab65c7df8538cce170231eb