IMF cuts growth forecasts for most countries in wake of century-high US tariffs

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WASHINGTON: On Tuesday, the International Monetary Fund (IMF) reduced its predictions for development in the United States, China and most countries, and now presented the impact of US revenue at a height of 100 years, and warned that further trade tensions will further develop.

The IMF has issued a refreshing work of its global economic outlook in just 10 days to announce the Universal tariff at almost all trade partners and high rates suspended on all countries at the moment.

It reduced its forecasts to 0.5 percent point for global growth.

It states that inflation will decrease gradually in January than expected, which, in view of the effects of revenue, reaches 4.3 percent in 2025 and 3.6 percent in 2026, with “remarkable” revised for the United States and other modern economies.

The IMF termed the report based on the progress of the present moment, citing the most complexity and fluency, as “reference prediction”.

“We are entering a new era because the global economic system, which has been operating for the last 80 years, is being resettled,” IMF chief economist Perry Oliver Gorenchas told reporters.

The IMF said that the “extremely high level” of uncertainty about trade tensions and uncertainty about future policies will have a significant impact on global economic activity.

“This is very important and is targeting all regions of the world. We are seeing low growth in the United States, low growth in the euro area, low growth in China, low growth in other parts of the world,” Gurinchas told Reuters.

“If we increase trade tensions between the United States and other countries, which will boost additional uncertainty, which will create additional fluctuations in the financial market, which will tighten the financial situation,” he added, adding that the bundle effect will reduce global growth.

He said the possibility of weak growth has already reduced the demand for the dollar, but there was an adjustment order in the currency markets and the balance of portfolio visible to date.

“We are not watching any runs to go out or get out,” said Gornechas. “At this stage, we have no idea about the flexibility of the international financial system. This will be much greater than that. “

However, the chances of medium-term growth remained minor, with a five-year prediction less than 3.7 % of the historical average during 2000-2019, with no relief that has no significant structural reforms.

The IMF raised its forecast to 1.5 percent to 1.7 percent to increase global trade, which is half the growth seen in 2024, which reflects the fastest pieces of the global economy. “The maintenance of the forecast, whatever form, is absolutely critical to explain the trading system,” he said.

US growth, inflation increases

The IMF reduced its predictions for US growth from 0.9 percent to 1.8 percent in 2025 – this is less than 2.8 percent increase in 2024 – and referring to policy uncertainty and trade tension, 0.4 percent points 1.7 percent in 2026.

Gurinchas told reporters that the IMF is not predicting recession in the United States, but the problems of misery have increased from about 25 % to 37 %. He said that the IMF is now reaching the US headline inflation in 2025, which is one percent higher than its prediction in January, which is due to the basic power in revenue and services.

This meant that the Federal Reserve would have to be very vigilant in anchoring inflation expectations, Gurinchas said, adding that many Americans are still tainted due to inflation due to inflation.

When asked about the effects of any White House move to remove the feed chair Jerome Powell, Goreshas said it was “absolutely fragile” that the central bank was able to remain free to maintain its credibility in dealing with inflation.

On Monday, US stocks suffered tremendous losses when the US president promoted his attacks on Powell, raising concerns about central bank independence.

Both US neighbors Canada and Mexico have been subjected to many Trump’s rates, and also saw a decline in their growth forecast. The IMF’s forecast will increase Canada’s economy by 1.4 percent in 2025 and 1.6 percent in 2026, rather than predicted in both years in January. It predicted that Mexico would be severely affected by prices, its growth would decrease by 0.3 percent in 2025, which was a decrease of 1.7 percent from January predictions, before 1.4 percent increased by 1.4 percent in 2026.

Low growth in Europe, Asia

The IMF forecast in the euro area will be 0.8 percent in 2025 and 1.2 percent in 2026, with both predictions decreasing by 0.2 percent from January. He said that Spain was an outlet, predicting a 2.5 percent growth for 2025, which is a revision of 0.2 percent points, which reflects strong data.

The increasing wage in the offshating forces and its “debt break” in Germany includes strong consumption due to a major changes in the “debt break”. The IMF has reduced its growth forecast for Germany to 0.3 % in 2025, and reduced 0.2 percent points 0.9 percent in 2026.

Compared to the January forecast, Japan’s economic activity is expected to shake 0.5 percent points in 2025, with a rate of 0.6 %. China’s growth forecast decreased from 2025 and 2026 to 4.0 percent, which reflects the downward review of a January prediction of 0.6 percent and 0.5 percent.

Gurinchas said the impact of revenue on China – relies heavily on exports – about 1.3 percent points in 2025, but it was presented by a strong fiscal year.