IMF says global economic structure experiencing significant ‘reset’
The International Monetary Fund has revised its global growth outlook downward for 2025, citing a fundamental transformation in the global economic system amid increasing uncertainty concerning US trade policy. Since taking office in January,...
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The International Monetary Fund has revised its global growth outlook downward for 2025, citing a fundamental transformation in the global economic system amid increasing uncertainty concerning US trade policy.
Since taking office in January, US President Donald Trump has implemented extensive trade restrictions, including what he refers to as ‘Liberation Day’ tariffs, which were introduced on April 2.
According to the IMF, these tariffs have reached levels not seen since the Great Depression. The organization stated in its latest World Economic Outlook that global output is expected to decelerate to 2.8% this year, a decline from 3.3% in 2024. The IMF had maintained a steady growth forecast for 2025 as recently as January.
“The global economic system under which most countries have operated for the last 80 years is being reset, ushering the world into a new era,” said IMF chief economist Pierre-Olivier Gourinchas.
He elaborated that the current rules are being contested, while new regulations have yet to be established. The sudden increase in tariffs and the broader uncertainty in policy could significantly hinder global growth, Gourinchas warned.
The IMF has also downgraded its prediction for US economic output to 1.8% in 2025, down from 2.8% last year, and forecast a continued slowdown into 2026.
US trading partners, including Mexico, Canada, and China, are expected to experience negative impacts as well. China's growth is anticipated to decelerate to 4% this year as it attempts to mitigate the repercussions of the tariffs imposed by Washington. Furthermore, the IMF predicts that most European Union economies will also encounter slower growth as a result.
Trump has enacted a blanket 10% tariff on nearly all imports and has placed duties of at least 145% on goods from China entering the US. Additionally, he has implemented “reciprocal” tariffs on major trading partners, alleging unfair trade practices. Although he has paused the tariffs until July while the administration seeks bilateral trade agreements, he has warned that the tariffs could be reinstated if other countries retaliate. The ongoing trade tensions and uncertainty in policy have unsettled global markets.
Frederick R Cook for TROIB News
Since taking office in January, US President Donald Trump has implemented extensive trade restrictions, including what he refers to as ‘Liberation Day’ tariffs, which were introduced on April 2.
According to the IMF, these tariffs have reached levels not seen since the Great Depression. The organization stated in its latest World Economic Outlook that global output is expected to decelerate to 2.8% this year, a decline from 3.3% in 2024. The IMF had maintained a steady growth forecast for 2025 as recently as January.
“The global economic system under which most countries have operated for the last 80 years is being reset, ushering the world into a new era,” said IMF chief economist Pierre-Olivier Gourinchas.
He elaborated that the current rules are being contested, while new regulations have yet to be established. The sudden increase in tariffs and the broader uncertainty in policy could significantly hinder global growth, Gourinchas warned.
The IMF has also downgraded its prediction for US economic output to 1.8% in 2025, down from 2.8% last year, and forecast a continued slowdown into 2026.
US trading partners, including Mexico, Canada, and China, are expected to experience negative impacts as well. China's growth is anticipated to decelerate to 4% this year as it attempts to mitigate the repercussions of the tariffs imposed by Washington. Furthermore, the IMF predicts that most European Union economies will also encounter slower growth as a result.
Trump has enacted a blanket 10% tariff on nearly all imports and has placed duties of at least 145% on goods from China entering the US. Additionally, he has implemented “reciprocal” tariffs on major trading partners, alleging unfair trade practices. Although he has paused the tariffs until July while the administration seeks bilateral trade agreements, he has warned that the tariffs could be reinstated if other countries retaliate. The ongoing trade tensions and uncertainty in policy have unsettled global markets.
Frederick R Cook for TROIB News
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