IMF Downplays Global Recession Fears Despite US Tariffs
Despite rising economic tensions triggered by the latest round of US tariffs, the International Monetary Fund (IMF) has assured the global community that a recession is not imminent.
In its updated world economic outlook, the IMF acknowledged growing uncertainty surrounding global trade, calling it “literally off the charts,” but emphasized that the slowdown does not amount to a full-blown recession.
“Our new growth projections will include notable markdowns, but not recession,” the report stated.
The reassurance comes amid market jitters sparked by US President Donald Trump’s recent introduction of sweeping trade tariffs, dubbed the “Liberation Day” tariffs, on 2 April. The move led to an immediate drop in global stock markets. The FTSE 100, which tracks the largest UK-listed firms, remains 4.6% lower compared to last month.
Business confidence has also taken a hit, with companies scaling back on investments and expenditure, while some countries have retaliated with their own tariffs. The World Trade Organization (WTO) has since forecast a decline in global trade volume for 2025, citing the impact of the US policy shift.
Central banks have echoed these concerns. The Bank of England warned of a “material increase in the risk to global growth,” while the European Central Bank (ECB) responded by cutting its key interest rate, attributing the decision to heightened trade tensions.
Nonetheless, the IMF struck a more optimistic tone. Managing Director Kristalina Georgieva urged world leaders to remain calm and adopt smart, coordinated policy responses.
“A better balanced, more resilient world economy is within reach. We must act to secure it,” Georgieva said on Thursday.
She encouraged Europe to eliminate internal trade restrictions in services and deepen its single market. She also advised China to expand its social safety net to curb excessive precautionary saving and called on the US to address its rising national debt.
The IMF’s latest remarks suggest that while global economic headwinds are intensifying, coordinated action and strategic reforms could prevent a worst-case scenario.
As markets continue to respond to policy shifts, economists say the next few months will be critical in determining whether stability or volatility prevails in global trade.
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IMF Downplays Global Recession Fears Despite US Tariffs