IMF Cuts Trade Growth Outlook Amid Mounting Global Uncertainty
The International Monetary Fund (IMF) is sounding the alarm over rising risks to the global economy, with escalating tariffs now at the center of its latest concerns.
In its newly released World Economic Outlook, the IMF notes that after years of turbulence, the global economy had shown signs of stabilization.
However, that progress now appears fragile as tariff threats — particularly those stemming from President Trump’s recent push for sweeping import taxes — inject fresh uncertainty into the financial system.
Citing the sharp increase in tariffs announced on April 2, the IMF said it has made a significant downward revision to its global growth forecasts compared to its January projections.
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According to the report, tariffs act as a supply-side shock, diverting resources into less competitive industries, eroding productivity, and pushing up production costs and prices.
In the longer term, the organization warns that sustained tariffs could reduce innovation, entrench monopolistic behavior among domestic firms, and stifle economic dynamism. For global trade partners, tariffs create negative demand shocks by driving customers elsewhere — though the IMF notes a few countries could see marginal benefits from shifts in trade routes.
In response to these developments, the IMF has cut its expectations for global trade growth by 1.5%, though it anticipates a modest recovery in the following year if trade tensions ease.
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