Uncertainty affecting growth prospects – IMF

Navigating Uncertainty How Trade Developments Impact Global Growth Prospects

As global economies continue to navigate the complexities of trade negotiations, uncertainty remains a significant factor in shaping growth prospects. The International Monetary Fund (IMF) has recently announced that its next global growth forecast will take into account both positive and negative trade developments.

The IMF's Uncertainty Factor

In its April World Economic Outlook, the IMF had already anticipated a slowing down of global economic activity due to ongoing trade tensions. However, recent developments have offered some optimism, including a major tariff reduction between the United States and China, as well as an initial trade deal between the US and Britain.

A Complex Economic Landscape

While these developments offer some hope, they are still subject to heightened uncertainty, particularly as trade negotiations continue. The IMF will also take into account US President Donald Trump's added steel and aluminum tariffs, which have now reached 50 percent for all exporters.

The World Bank's Warning

The World Bank has recently slashed its 2025 global growth forecast by four-tenths of a percentage point from its January forecast to 2.3 percent. This reduction is largely attributed to higher tariffs and heightened uncertainty, which pose a significant headwind for nearly all economies. The World Bank cut forecasts for nearly 70 percent of all economies, including the US, China, and Europe.

The IMF's Forecast Adjustment

In contrast, the IMF's April forecast adjustment did take into account Trump's initial tariff assault, reducing the 2025 global growth outlook by half a percentage point from its January forecast to 2.8 percent. This adjustment was made to reflect a slower decline in inflation.

Looking Ahead A Complicated Picture

The next IMF World Economic Outlook update is scheduled for late July, with many countries seeking to negotiate tariff-reducing deals before then. The current deadline for Trump's reciprocal tariff pause is set to expire on July 8, with the possibility of extensions for countries engaged in good faith negotiations with the US.

Conclusion Navigating Uncertainty

In conclusion, the IMF's next global growth forecast will take into account both positive and negative trade developments, highlighting the ongoing uncertainty surrounding the global economy. As we navigate this complex landscape, it is essential to consider all factors, including recent activity indicators and potential future developments. By doing so, we can better understand how trade tensions will impact growth prospects in 2025.

Keywords IMF, Global Growth Prospects, Trade Developments, Uncertainty

Edward Lance Arellano Lorilla

CEO / Co-Founder

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