The outlooks for the US and global economies have significantly worsened in the wake of President Donald Trump’s tariffs and the uncertainty they have created, the International Monetary Fund (IMF) said on Tuesday.
Advertisement
The IMF said that the global economy will grow just 2.8 per cent this year, down from its forecast in January of 3.3 per cent, according to its latest World Economic Outlook. And in 2026, global growth will be 3 per cent, the fund predicts, also below its previous 3.3 per cent estimate.
US economic growth will come in at just 1.8 per cent this year, down sharply from its previous forecast of 2.7 per cent and a full percentage point below its 2024 expansion. The IMF does not expect a US recession, though it has raised its odds of one this year from 25 per cent to 37 per cent.
The forecasts are largely in line with many private-sector economists’ expectations, though some do fear a recession is increasingly likely. Economists at JPMorgan say the chances of a US recession are now 60 per cent. The Federal Reserve has also forecast that growth will weaken this year, to 1.7 per cent.
“We are entering a new era,” Pierre-Olivier Gourinchas, chief economist at the IMF, said. “This global economic system that has operated for the last eighty years is being reset.”
Advertisement
When asked about calls by Trump for the removal of Federal Reserve Chair Jerome Powell, Gourinchas, underscored the importance of preserving central banks’ independence to maintain their credibility in fighting inflation.