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IMF upgrades outlook for global economy, citing less-than-expected damage from Trump's trade wars
IMF upgrades outlook for global economy, citing less-than-expected damage from Trump's trade wars

Asahi Shimbun

time4 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.

IMF lifts 2025 growth forecast on ‘fragile' easing in trade tensions
IMF lifts 2025 growth forecast on ‘fragile' easing in trade tensions

Qatar Tribune

timean 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.

Bank of England chiefs tipped to cut interest rates twice more before the end of the year to aid growth
Bank of England chiefs tipped to cut interest rates twice more before the end of the year to aid growth

Scottish Sun

timean hour 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

Bank of England chiefs tipped to cut interest rates twice more before the end of the year to aid growth
Bank of England chiefs tipped to cut interest rates twice more before the end of the year to aid growth

The Sun

timean hour 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

Britain needs a tax break: Labour's lavish spending hurts jobs, work and commerce, says ALEX BRUMMER
Britain needs a tax break: Labour's lavish spending hurts jobs, work and commerce, says ALEX BRUMMER

Daily Mail​

timean hour ago

  • Business
  • Daily Mail​

Britain needs a tax break: Labour's lavish spending hurts jobs, work and commerce, says ALEX BRUMMER

Aspiration is terrific, but Labour's bravado about Britain being the fastest growing economy in the G7 was always hooey. Economic output is trivialised if assessed as a sports league table. Any growth at all is welcome in an uncertain world of tariffs, fragmentation and geopolitical turmoil. Raising taxes by £40billion and piling much of the cash into the public sector without productivity targets was a nonsense. Worse, the surcharge on employers' National Insurance (NI) contributions and levies on wealth penalised jobs, work and enterprise. Latest forecasts from the International Monetary Fund (IMF) show that UK growth at 1.2 per cent this year and 1.4 per cent next will lag that of the US and Canada. Despite nostalgia in some quarters for a return to the European Union, the UK's fleet-of-foot services-led economy outpaces Germany and France. The IMF has upgraded forecasts for global output this year and in 2026. In April, the Fund's projections were overshadowed by Liberation Day tariffs. But Britain, Japan, India and the EU have limited damage. The US and China are still working on a deal so, critically, a new era of beggar-thy-neighbour retaliatory actions has been averted. The brakes on globalisation have been applied. Data from Yale University's Budget Lab shows that, after the EU deal, the average tariff for goods entering the US will be 17.3 per cent, the highest since the 1930s. There is no mystery as to Donald Trump's remedy for dealing with stuttering growth. As master instructed pupil Keir Starmer in Scotland this week, the best way forward is lower taxes. Lessons of October 2024 must be learned. Every tax increase outlined, from NI and capital gains to inheritance and stamp duties on lower priced homes, stymied commerce. Simple changes to the tax system could help. Abolishing stamp duty on share trading would boost listings and confidence. Including digital expenditure in full expensing of capital spending could light a fire under AI and biotech. As wonderful as reviving tin production in Cornwall may be, spending money on an AstraZeneca plant just might have averted the pharma giant's American tilt. Captain America AstraZeneca boss Pascal Soriot has good reason to look across the Atlantic. A knighthood is one kind of recognition. But Keir Starmer's government has still to come up with a credible pharma strategy. A fixation on steel, car making and renewables has left medicines, one of Britain's most dynamic industries, in the lurch. Soriot remains tight-lipped on a move of Britain's largest listed company to New York. His current enthusiasm for America shows no bounds. A £37billion US investment strategy and a promise of local manufacturing is his ace card. AstraZeneca has two world class R&D centres and a workforce of close to 20,000 in America. It has good reason to double down on a market which represents 40 per cent of sales. Speaking to CNBC, the Astra boss also praised the US for its science and innovation. There was barely a mention of home territories in the UK and Sweden. AZ's pipeline of oncology drugs is as strong as ever with sales up 15 per cent at £9billion, contributing almost half of total revenues in the first half of the year. Next on the agenda for Soriot is an oral compound designed to take on leaders Novo Nordisk and Eli Lilly on weight loss. He believes that his company can deliver Americans an oral medicine at a cheaper price than rivals. The meltdown in first mover Novo Nordisk's share price suggests investors believe the weight loss tortoise could, eventually, catch the hare. Trading places Barclays is thriving despite a reputational hit from the Jes Staley-Epstein relationship. Goldman Sachs looks to be cooling off on the UK. But Barclays retains its place as Europe's most influential investment bank. It is a big beneficiary of volatility since Liberation Day with profits climbing by 23 per cent on the back of an industry beating 26 per cent gain on fixed interest, currencies, and commodity trading. As chief executive Venkat reiterated, success should not be an excuse for Labour to clobber banks with more tax.

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