IMF Cautions on Trade Tensions Impact on Global Economy

The International Monetary Fund (IMF) issued a warning on Friday, stating that potential risks stemming from trade disputes are still casting a shadow over the global economic perspective. Despite some increases in commerce and improvements in financial circumstances, considerable uncertainty remains.

Gita Gopinath, the IMF’s First Deputy Managing Director, mentioned that the organization intends to revise its global forecast later in July. This update will consider factors such as “front-loading in anticipation of tariff hikes and some trade redirection,” alongside more favorable financial conditions and indications of ongoing inflation declines.

In April, the IMF had already lowered its economic growth projections for the United States, China, and numerous other nations, pointing to the effects of US import tariffs, which are currently at a century-high level. The IMF cautioned that escalating trade tensions would further impede economic expansion.

During that period, the IMF reduced its global growth forecast by 0.5 percentage points to 2.8% for 2025 and by 0.3 percentage points to 3%. Economists are anticipating a modest upward adjustment when the IMF unveils its updated forecast towards the end of July.

Gopinath informed finance officials from the Group of 20 major economies, during their meeting this week in South Africa, that trade tensions continue to pose difficulties for the economic outlook.

In her prepared remarks, she stated, “While our global forecast will be updated at the end of July, downside risks are still the predominant factor in the outlook, and a high degree of uncertainty remains.”