The International Monetary Fund (IMF) has just published a rose-tinted view of the global economy. This is a stark contrast to the World Trade Organization’s (WTO) recent prediction that U.S. tariffs will lead to a slowdown in global trade. While the WTO predicts that global trade will fall this year as a result of the tariffs imposed by President Donald Trump, the IMF maintains that there will not be a global recession.
Past Kristalina Georgieva, managing director of the IMF, its decidedly to suggest nations respond intelligently. She implored them to do right by American producers by resolving their ongoing trade challenges. As she said, “this is a challenge to react smartly,” calling attention to collective global action that is needed from nations.
The IMF’s assessment comes against a backdrop of rising uncertainty regarding trade tariffs, which Georgieva described as “literally off the charts.” Escalating trade tensions have injected further uncertainty into the market. In reaction, the European Central Bank (ECB) recently announced its commitment to lowering its key interest rate. Additionally, the Bank of England noted that these tensions have “contributed to a material increase in the risk to global growth” and financial stability.
In the wake of Trump’s initial tariff announcement on April 2, stock markets around the world plummeted, posting some of their biggest one-day drops. The FTSE 100 index is a measure of the performance of the largest listed firms in the UK. As of this writing, it’s 4.6% lower than it was a month ago.
Despite the uphill battle, the IMF’s projections bring some hopeful news. Some growth estimates will likely be marked down materially, but a recession is not in the forecast. Georgieva emphasized that “our new growth projections will include notable markdowns, but not recession.”
In her prepared remarks, Georgieva challenged major economies to do more. And she continued to push China to develop a robust social safety net. She called on the U.S. government to find ways to reduce its own debt. She advocated for Europe to eliminate “restrictions on internal trade in services” and to “deepen” its single market.
Georgieva expressed her belief that “a better balanced, more resilient world economy is within reach. We must act to secure it.” Her comments reflect a growing consensus among financial leaders that proactive measures are necessary to mitigate risks associated with trade disputes and ensure stable economic growth.