IMF Cites Trade Tensions as Risk to 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 prospects for the global economy. Despite some improvement in trade activity and financial circumstances, significant uncertainty persists, according to the IMF.

Gita Gopinath, the IMF’s First Deputy Managing Director, mentioned that the organization plans to revise its global economic forecast later in July. This update will consider factors such as accelerated activity preceding tariff increases, shifts in trade patterns, more favorable financial conditions, and indications of ongoing disinflation.

In April, the IMF had already lowered its economic growth predictions for the United States, China, and a majority of other nations. This was largely attributed to the impact of US import tariffs, which have reached levels not seen in a century. The IMF cautioned that escalating trade tensions would further hinder economic expansion.

At that time, 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%. Economic analysts anticipate a modest upward adjustment when the IMF unveils its updated forecast towards the end of July.

Gopinath informed finance ministers and central bank governors from the Group of 20 (G20) major economies, during their meeting in South Africa this week, that trade tensions continue to present challenges to the economic outlook.

In her prepared remarks, she stated, “While we will be updating our global forecast at the end of July, downside risks continue to dominate the outlook, and uncertainty remains high.”