The International Monetary Fund (IMF) has warned that the global economy is expected to slow significantly due to US President Donald Trump’s trade war policies. The IMF forecasts global economic growth of 2.8% this year, down from its previous estimate of 3.3%. In 2026, global growth is predicted to be 3%, below the previous forecast of 3.3%.
The US economy is expected to experience a slowdown as well, with growth projected at 1.8% this year, down sharply from its previous forecast of 2.7%. China’s economy, however, is expected to expand by 4% this year and next, despite the tariffs imposed on its exports.
The IMF warns that the trade war has created uncertainty around global economic trends, with every country affected by hikes in US import taxes. The organization has prepared several different scenarios for future growth, but these have not been significantly changed by recent developments.
The Trump administration’s tariffs have disrupted supply chains and are expected to hit less-developed nations hard. Mexico’s economy is now forecast to shrink this year by 0.3%, while South Africa’s economy is expected to grow just 1% this year.
Inflation in the US is expected to worsen, rising to around 3% by the end of this year, while it will remain little changed in China. The IMF acknowledges that there are concerns about globalization displacing domestic manufacturing jobs, but attributes the decline in manufacturing employment to technological progress and automation.
The European Union’s economy is forecast to grow more slowly than expected, while Japan’s growth forecast has been downgraded significantly. The IMF warns that global financial stability risks have increased significantly, with some stock and bond prices remaining high despite recent market volatility.
Source: https://apnews.com/article/recession-imf-economy-tariffs-5ec37492c9fac499923c094776b87552