IMF Sees Significant Cuts in Global Economic Forecasts, but No Recession

See - Sada Elbalad

18-04-2025

Taarek Refaat
International Monetary Fund Managing Director Kristalina Georgieva predicted a downward revision of the Fund's forecasts amid escalating trade tensions and radical shifts in the global trading system, but she does not expect a global recession.
Georgieva added that economies are facing a difficult test due to the reboot of the global trading system in recent months as a result of US tariffs and retaliation from China and the European Union, which has unleashed "unprecedented" trade policy uncertainty and extreme volatility in financial markets.
She continued, "Disruption carries costs. Our new growth forecasts will include significant price reductions, but not a recession," adding that the forecasts will also include expectations of rising inflation in some countries.
Georgieva stated that increased uncertainty has also increased the risk of financial market stress, noting that recent movements in US Treasury yield curves should be considered a warning. 'Everyone suffers if financial conditions worsen,' she said.
Speaking at the IMF headquarters in Washington ahead of the IMF and World Bank spring meetings next week, Georgieva did not provide details on the expected adjustments, but warned that continued uncertainty would be costly.
US President Donald Trump has upended the global trading system by imposing a wave of new tariffs, including a 10% US tariff on goods from all countries, and higher tariffs on some, suspended for 90 days to allow for negotiations. China, the European Union, and other countries have announced retaliatory measures.
In January, the IMF projected global growth of 3.3% in 2025 and 3.3% in 2026. The fund will release an updated World Economic Outlook report next Tuesday.
Regarding the International Monetary Fund's forecasts for the global economy—due to be released Tuesday in its World Economic Outlook report—Georgieva revealed that the updated growth forecasts will see "significant reductions, but not to the point of recession," and that inflation is expected to accelerate due to trade tariffs.
The World Trade Organization (WTO) also lowered its forecast for this year's merchandise trade volume due to escalating US tariffs, predicting a 0.2% contraction in global merchandise trade in 2025.
She added that higher tariffs directly harm growth, noting that past evidence has shown that importers pay higher tariff rates with lower profits, while consumers pay with higher costs.
In large economies, these tariffs can also create incentives for new domestic investment, which creates new jobs, but this takes time, according to the IMF chief.
'Protectionism weakens productivity in the long run, especially in small economies,' the director said, warning that moves to shield industry from competition also undermine entrepreneurship and harm innovation.
Georgieva urged countries to respond wisely to the sudden and sweeping shifts in tariffs, which have pushed the effective tariff rate in the United States to levels not seen in centuries, prompting a reaction from other countries.
'While giant countries face off, smaller ones find themselves caught in crosscurrents,' Georgieva said. She added that China, the European Union, and the United States are the world's three largest importers, which has significant implications for smaller countries that are more vulnerable to tighter financial conditions.
She emphasized that countries must continue working on economic and financial reforms while maintaining flexible and credible monetary policy, as well as strong financial market regulation and oversight.
She also emphasized that emerging market economies should maintain flexible exchange rates, and that donor countries should better protect aid flows to vulnerable low-income countries.
Georgieva also called for cooperation among countries, urging the largest economies to reach a trade settlement that maintains openness and relaunches a global trend toward lowering tariff rates and reducing non-tariff barriers.
Georgieva said, "We need a more resilient global economy, not a slide toward fragmentation. All countries, large and small, can and should play their part in strengthening the global economy in an era of more frequent and severe shocks."
read more
CBE: Deposits in Local Currency Hit EGP 5.25 Trillion
Morocco Plans to Spend $1 Billion to Mitigate Drought Effect
Gov't Approves Final Version of State Ownership Policy Document
Egypt's Economy Expected to Grow 5% by the end of 2022/23- Minister
Qatar Agrees to Supply Germany with LNG for 15 Years
Business
Oil Prices Descend amid Anticipation of Additional US Strategic Petroleum Reserves
Business
Suez Canal Records $704 Million, Historically Highest Monthly Revenue
Business
Egypt's Stock Exchange Earns EGP 4.9 Billion on Tuesday
Business
Wheat delivery season commences on April 15
News
Egypt confirms denial of airspace access to US B-52 bombers
News
Ayat Khaddoura's Final Video Captures Bombardment of Beit Lahia
Lifestyle
Pistachio and Raspberry Cheesecake Domes Recipe
News
Australia Fines Telegram $600,000 Over Terrorism, Child Abuse Content
Arts & Culture
Nicole Kidman and Keith Urban's $4.7M LA Home Burglarized
Videos & Features
Bouchra Dahlab Crowned Miss Arab World 2025 .. Reem Ganzoury Wins Miss Arab Africa Title (VIDEO)
Sports
Neymar Announced for Brazil's Preliminary List for 2026 FIFA World Cup Qualifiers
News
Prime Minister Moustafa Madbouly Inaugurates Two Indian Companies
Arts & Culture
New Archaeological Discovery from 26th Dynasty Uncovered in Karnak Temple
Arts & Culture
Arwa Gouda Gets Married (Photos)