Washington
International Monetary Fund (IMF) managing director Christalina Georgree on Thursday gave a relief news in the global trade. He said that increasing tariffs in America will weaken the global economy and inflation will also increase this year but they will not cause global recession. He also said that the IMF will decline in its economic growth rate forecasts due to increasing trading stress and major changes in the global trade system, but there is no possibility of global recession.
He said this based on the projections to be released next week of the IMF. Georgeeva said that the new tariff imposed by the US and the retaliation by China and the European Union has shaken the global trade system. This has given “extreme uncertainty” in trade policy and “extreme instability” in financial markets. He said, “The price of the disruption has to be paid… There will be a significant decline in our new development estimates but there will be no recession.”
Georgeeva said on Thursday that the increase in fee rates by the US administration has increased global uncertainty. He said, “Import duty will slow down global growth and inflation will increase but they will not cause recession around the world.” Georgeeva said that major changes in the global trade system are being tested for the world economy, which is a threat of turmoil in the financial markets. The IMF warning comes at a time when US President Donald Trump’s tariff policy and the stir in the global market are scheduled to participate in the meeting of Union Bankers and Finance Minister Washington from all over the world.
He said that fees cause uncertainty, which may be expensive. The complexity of supply will affect the cost of one item in many countries due to fees in many countries. Increase in trade barriers also has an immediate effect on increase, and although it can increase domestic production, it takes time to happen. However, the IMF chief also reiterated some of the US administration concerns. He called upon countries to reduce the fees and reduce other obstacles in trade. The full assessment of the IMF will be released on next Tuesday.
Economic status and concern on market
Georgai said that the world’s actual economy is still strong – there is still a strong labor market and a stable financial system. But he also warned that if there were negative perceptions about the economic recession, then it could also affect real economic activities. He said, “In the period of crisis, I have learned that the more important perception is, the more reality is. If the perception becomes negative, it can affect the performance of the economy badly.”
The effect of tariff and potential inflation
The IMF had estimated the global growth rate to be 3.3% for 2025 and 2026 in January. Now this institution will release its new ‘World Economic Outlook’ on Tuesday. Georgeeva did not say how much new projections would decline, but they warned that this decline would be “important”. Regarding inflation, he said that tariffs can increase consumer and productive prices in some countries, while the cost of spending can also reduce inflation. Overall, inflation is expected to increase for some countries.
Appeal for cooperation from America and China
Georgieva said that business stress is not new; The fee and non-fee obstacles between the US, China and other countries were already made, but now the situation has worsened. He urged that the United States and China, which are the two largest economies in the world, find solutions for a fair and rule-based trade system, as it also affects small countries. He said, “Conservationism damages productivity in a long time, especially in small countries. Attempts to protect industries from competition also harm innovation and entrepreneurship.”
IMF recommendations
The IMF chief urged countries to maintain flexibility in monetary policy, monitor financial markets, and continue economic reforms. Developing countries were advised to maintain flexibility in their exchange rates, while the rich countries were appealed to maintain assistance to weaker countries. He said, “We need a more flexible global economy, not to flow towards partition. All countries, big or small, should play their role in strengthening the global economy in this indefinite phase.”