Trade tensions are rising, but the global economy will avoid recession, the IMF has said.
In its latest world economic forecast, the International Monetary Fund warned that tariff uncertainty is “literally off the charts” and global share prices have plunged “as trade tensions flared”.
Despite this, the IMF has not forecast a worldwide downturn. “Our new growth projections will include notable markdowns, but not recession,” the report stated.
The remarks follow US President Donald Trump’s controversial “Liberation Day” tariffs, announced on 2 April. Global markets tumbled in response, with the UK’s FTSE 100 still down 4.6 per cent on last month.
The World Trade Organization now expects global trade to fall this year. The Bank of England has also flagged “a material increase in the risk to global growth” due to tariffs.
The European Central Bank cited “rising trade tensions” as it cut its key interest rate on Thursday.
Still, IMF managing director Kristalina Georgieva remains cautiously optimistic. “[This] is a call to respond wisely,” she said. “A better balanced, more resilient world economy is within reach. We must act to secure it.”
She urged governments to “put their own houses in order”, calling on Europe to deepen its single market and the US to reduce debt.
