Latest news with #IMF
Daily Mail
13 minutes ago
- Business
- Daily Mail
IMF urges UK to make two interest rate cuts... as Labour's pledge to make Britain fastest growing economy in the G7 lies in tatters
Britain looks set for two more interest rate cuts this year to boost the economy as it lags behind Donald Trump 's America, according to a leading global watchdog. In a report on Tuesday, the International Monetary Fund (IMF) said it expects rates to drop from the current 4.25 per cent to 3.75 per cent by Christmas. It came as the fund warned Labour's pledge to make Britain the fastest growing economy in the G7 is in tatters in the wake of the Chancellor's tax hikes. EU members of the group are faring even worse – compounding the bloc's misery as it reels from a lopsided trade deal with the US that has left it with worse terms than Brexit Britain. Germany, France and Italy, as well as Japan, will all grow less than the UK over the next two years, according to the IMF. Two more rate cuts – as suggested by the IMF – would boost households and businesses hoping for lower borrowing costs. Britain does hold some unwanted records, with inflation the highest among the seven nations at 3.6 per cent. The UK Government's borrowing costs on the international bond markets are also higher than in any other G7 nation – piling further strain on creaking public finances. Shadow Chancellor Mel Stride said: 'Business confidence has collapsed all because of the Chancellor's reckless economic choices.' In an update to its World Economic Outlook, the IMF said it expects the UK economy to grow by 1.2 per cent this year and 1.4 per cent in 2026.
Asahi Shimbun
43 minutes ago
- Business
- Asahi Shimbun
IMF upgrades outlook for global economy, citing less-than-expected damage from Trump's trade wars
A man takes out a scooter at the International Monetary Fund headquarters after closing of the IMF/World Bank annual meetings in Washington on Oct. 9, 2016. (REUTERS/File Photo) WASHINGTON--The International Monetary Fund is upgrading the economic outlook for the United States and the world this year and next because President Donald Trump's protectionist trade policies have so far proven less damaging than expected. The IMF now forecasts 3% growth for the global economy this year. That is down from 3.3% in 2024 but an improvement on the 2.8% it had forecast for 2025 back in April. The 191-country lender, which works to promote growth, stabilize the world financial system and reduce poverty, expects world growth to come in at 3.1% next year, up a tick from the 3% it had forecast three months ago. Trump's decision on April 2 – 'Liberation Day," the president called it -- to impose taxes of 10% or more on U.S. imports from most of the world's countries had been expected to be a bigger drag on global growth. But the damage was limited, the IMF said, partly because many U.S. importers scrambled to bring in foreign goods before Trump's tariffs took effect and partly because Trump ended up suspending his biggest levies (including a 145% duty on Chinese goods). 'This modest decline in trade tensions, however fragile, has contributed to the resilience of the global economy so far,' IMF chief economist Pierre-Olivier Gourinchas said in remarks prepared for the rollout Tuesday of fund's updated forecasts. "This resilience is welcome, but it is also tenuous. While the trade shock could turn out to be less severe than initially feared, it is still sizeable, and evidence is mounting that it is hurting the global economy.'' Tariffs raised $108 billion for the U.S. Treasury from October through June, nearly double the $55.6 billion they brought during the same period of the previous fiscal year. Global growth of around 3% is below pre-pandemic average and the world economy would be growing faster without Trump's trade wars. The IMF modestly upped its forecast for U.S. economic growth to 1.9% this year and 2% in 2026 when the big tax cuts Trump signed into law July 4 are expected to provide 'a near-term boost.'' The Chinese economy, the world's second biggest, is expected to grow 4.8% this year, a hefty upgrade from the 4% the IMF had forecast in April. China is getting a boost from lower-than-expected U.S. tariffs and from government spending. The 20 economies that share the euro currency are collectively expected to expand 1%, up from the 0.8% the IMF had forecast in April. But a big chunk of that growth is coming from a surge of pharmaceutical exports from Ireland, which were timed to beat Trump's expected tariffs on drugs. Japan remains in a slow-growth rut and is expected to eke an expansion of just 0.7% this year and 0.5% next. India is once again expected to be the world's fastest-growing major economy, expanding a forecast 6.4% this year and next. Trump has pressured Japan and the European Union to accept 15% U.S. tariffs on their exports. Indonesia, Vietnam and the Philippines also agreed to accept stiff U.S. tariffs. More such deals are expected before Friday when Trump will slap even higher tariffs on countries that don't agree make concessions. Trump's protectionism is buffeting global commerce. The IMF upgraded its forecast for growth in world trade, measured by volume, to 2.6% this year. That is up from the 1.7% it had predicted in April and reflects a surge in shipments as exporters tried to beat the tariff crunch. But eventually the higher U.S. levies are expected to take a toll. The IMF sees trade growing just 1.9% next year, down from the 2.5% it had forecast in April.
Qatar Tribune
an hour ago
- Business
- Qatar Tribune
IMF lifts 2025 growth forecast on ‘fragile' easing in trade tensions
Agencies The IMF raised its global growth forecast Tuesday as efforts to circumvent Donald Trump's sweeping tariffs sparked a bigger-than-expected surge in trade, while the US president stepped back from some of his harshest threats. The International Monetary Fund still sees growth slowing this year, however, even as it lifted its 2025 projection to 3.0 percent—up from 2.8 percent in April—in its World Economic Outlook update. In 2024, global growth came in at 3.3 percent. Looking ahead, the IMF expects the world economy to expand 3.1 percent next year, an improvement from the 3.0 percent it earlier predicted. Despite the upward revisions, 'there are reasons to be very cautious,' IMF chief economist Pierre-Olivier Gourinchas told AFP. 'Businesses were trying to frontload, move stuff around, before the tariffs were imposed, and so that's supporting economic activity,' he said. 'There is going to be payback for that. If you stock the shelves now, you don't need to stock them later in the year or into the next year,' he added. This means a likelihood of reduced trade activity in the second half of the year and into 2026. 'The global economy has continued to hold steady, but the composition of activity points to distortions from tariffs, rather than underlying robustness,' the IMF's report said. For now, a 'modest decline in trade tensions, however fragile, has contributed to the resilience of the global economy,' Gourinchas told reporters Tuesday. Trump imposed a 10 percent levy on almost all trading partners this year, alongside steeper duties on autos, steel and aluminum. He paused higher tariffs on dozens of economies until August 1, a significant delay from April when they were first unveiled. Washington and Beijing also agreed to lower for 90 days triple-digit duties on each other's goods, in a halt expiring August 12. Talks that could lead to a further extension of the truce are ongoing. Trump's actions have brought the US effective tariff rate to 17.3 percent, significantly above the 3.5 percent level for the rest of the world, the IMF said. If deals unravel or tariffs rebound to higher levels, global output would be 0.3 percent down next year, Gourinchas said. US growth for 2025 was revised 0.1 percentage points up, to 1.9 percent, with tariffs anticipated to settle at lower levels than initially announced in April. The country is also set to see a near-term boost from Trump's flagship tax and spending bill. Euro area growth was adjusted 0.2 percentage points higher to 1.0 percent, partly reflecting a jump in Irish pharmaceutical exports to the United States to avoid fresh duties. — AFP Among European economies, Germany is still expected to avoid contraction while forecasts for France and Spain remained unchanged at 0.6 percent and 2.5 percent respectively. While the IMF anticipates global inflation to keep declining, with headline inflation cooling to 4.2 percent this year, it warned that US price increases will remain above target. 'The tariffs, acting as a supply shock, are expected to pass through to US consumer prices gradually and hit inflation in the second half of 2025,' the IMF report said. Elsewhere, Trump's duties 'constitute a negative demand shock, lowering inflationary pressures,' the report added. Growth in the world's number-two economy China, however, was revised 0.8 percentage points upwards to 4.8 percent. This reflects stronger-than-expected activity in the first half of 2025, alongside 'the significant reduction in US–China tariffs,' the IMF said. Gourinchas warned that China is still experiencing headwinds, with 'fairly weak' domestic demand. 'There is relatively little consumer confidence, the property sector is still a black spot in the Chinese economy, it's not been completely addressed,' he added. 'That is resulting in a drag on economic activity going forward.' Russia's growth was revised 0.6 percentage points down, to 0.9 percent, partially due to Russian policies but also oil prices, which are set to remain relatively subdued compared with 2024 levels, Gourinchas said.
Scottish Sun
2 hours ago
- Business
- Scottish Sun
Bank of England chiefs tipped to cut interest rates twice more before the end of the year to aid growth
Read on to see Rachel Reeves' reaction to the news and how it could affect growth CUTS 'ON CARDS' Bank of England chiefs tipped to cut interest rates twice more before the end of the year to aid growth Click to share on X/Twitter (Opens in new window) Click to share on Facebook (Opens in new window) INTEREST rates will be slashed twice more by the end of the year to aid growth, says global finance agency the IMF. The Washington-based body believes the rate will come down from 4.25 per cent. Sign up for Scottish Sun newsletter Sign up 2 Chancellor Rachel Reeves says the IMF forecasts show the UK remains the G7's fastest-growing European economy despite global challenges Credit: PA However, the pace of reductions around the world will be slower than previously forecast. The Bank of England is set to make its decision on rates next week. The IMF also upgraded its global growth rate marginally to 3 per cent for this year. It predicted the UK would be the third fastest growing G7 economy this year and in 2026. There has been a marginal upgrade to UK growth which is expected to rise by 1.2 per cent this year, which is 0.1 per cent higher than expected back in April. The global upgrade since April was largely driven by US tariffs being lowered since higher rates were first announced by Donald Trump. Warnings were also sounded over conflict in the Middle East, with possible risks to global shipping and trade, which could push up oil prices. Chancellor Rachel Reeves said: 'The IMF's forecasts show that the UK remains the fastest-growing European economy in the G7 despite the global economic challenges we are facing.' Workers' pay across the UK has slowed as businesses face increased staffing costs making an interest rate cut next month "more likely". Average weekly earnings, excluding and including bonuses, rose by 5% between March and May, according to the Office for National Statistics (ONS). Raising taxes will kill off growth, Reeves warned as she pledges to rip up business red tape
The Sun
2 hours ago
- Business
- The Sun
Bank of England chiefs tipped to cut interest rates twice more before the end of the year to aid growth
INTEREST rates will be slashed twice more by the end of the year to aid growth, says global finance agency the IMF. The Washington-based body believes the rate will come down from 4.25 per cent. 2 However, the pace of reductions around the world will be slower than previously forecast. The Bank of England is set to make its decision on rates next week. The IMF also upgraded its global growth rate marginally to 3 per cent for this year. It predicted the UK would be the third fastest growing G7 economy this year and in 2026. There has been a marginal upgrade to UK growth which is expected to rise by 1.2 per cent this year, which is 0.1 per cent higher than expected back in April. The global upgrade since April was largely driven by US tariffs being lowered since higher rates were first announced by Donald Trump. Warnings were also sounded over conflict in the Middle East, with possible risks to global shipping and trade, which could push up oil prices. Chancellor Rachel Reeves said: 'The IMF's forecasts show that the UK remains the fastest-growing European economy in the G7 despite the global economic challenges we are facing.' Workers' pay across the UK has slowed as businesses face increased staffing costs making an interest rate cut next month "more likely". Average weekly earnings, excluding and including bonuses, rose by 5% between March and May, according to the Office for National Statistics (ONS). Raising taxes will kill off growth, Reeves warned as she pledges to rip up business red tape 2
