The International Monetary Fund (IMF) said late Tuesday that a sharp increase in trade tariffs will significantly slow global growth this year and next, but the world economy will not slide into recession.
IMF’s chief economist Pierre-Olivier Gourinchas announced sweeping downgrades to the IMF’s growth forecasts and said world trade growth would be cut in half this year to reflect a “reset” of the global trading system, with US effective tariffs at the highest level for more than a century.
The World Economic Outlook (WEO) includes a “reference forecast,” which reflects policy announcements by the United States (US) and trading partners up to April 4, including the April 2 tariffs and initial responses. Under this forecast, global growth will slow to 2.8 percent this year and 3 percent next year, a cumulative downgrade of about 0.8 percentage point relative to the IMF’s previous set of projections, in January.
“While global growth remains well above recession levels, all regions are negatively impacted,” Gourinchas told a press briefing. He added that the probability of a world recession—that is, global growth falling below 2 percent—had almost doubled, to 30 percent from 17 percent in October. World trade growth will slow from 3.8 percent last year to 1.7 percent this year, according to IMF forecasts.
Gourinchas called for a stable trading environment that addresses longstanding gaps in international trading rules.
“Growth prospects could immediately improve if countries ease from their current trade policy stance, and promote a new, clear, and stable trade environment,” he added. Enditem
Source: Ghana Eye Report
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