US tariffs will weaken the global economy, inflation will increase; tariffs will not cause recession
IMF's claim: IMF Managing Director Kristalina Georgieva said on Thursday that tariffs imposed by the Trump administration have increased global uncertainty. She said import taxes will slow global growth, but will not cause a worldwide recession.
The International Monetary Fund (IMF) stated that the US rise in tariffs will make the international economy weaker. In addition to this, inflation will grow this year. But the rise in import duties will not lead to an international recession. This IMF estimate will be out next week, that is, on Tuesday.
IMF Managing Director Kristalina Georgieva said on Thursday that tariffs imposed by the Trump administration have increased global uncertainty. She said import taxes will slow global growth, but will not cause a worldwide recession. She said that the strength of the world economy is being tested, as major changes are taking place in the global trade system, and these changes can bring turmoil in the financial markets. She said this turmoil has been going on in the financial markets for the past few weeks, especially on Wall Street, which has experienced day-to-day and often hour-to-hour volatility.
IMF chief Georgieva also reiterated some of the Trump administration's concerns. She appealed to countries to reduce their tariffs and other barriers to trade. She said, 'Trade distortions - tariffs and non-tariff barriers - have fueled negative perceptions of the multilateral system, which has failed to give everyone a level playing field. Some places feel that something is going wrong with them. They believe they follow the rules, while others break the rules and take advantage.'
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Georgieva said tariffs cause uncertainty, which can be costly. She said that due to the complexity of supply chains, tariffs in dozens of countries can affect the cost of the same item. She said increased trade barriers also immediately affect growth, and while it can lead to more domestic production, it takes time to implement.
In its most recent projections, released in January, the IMF projected the world economy to grow nominally faster and inflation to ease. However, the IMF also warned that President Donald Trump's policies, including tax cuts and tariff hikes on foreign imports, have dimmed prospects. However, January forecasts are likely to change. In addition, the Washington-based lending agency said at the time that it expected the world economy to grow 3.3 percent this year and next, before recovering to 3.2 percent in 2024.
