IMF markdowns Trump tariff recession hazard

(MENAFN) International Monetary Fund (IMF) chief Kristalina Georgieva has stated that while President Donald Trump’s sweeping tariff plans are creating global economic uncertainty and weakening investor and consumer confidence, they are unlikely to trigger a recession in the near future.

In an interview with Reuters on Monday, Georgieva acknowledged that the IMF will likely make a slight downward revision to its global economic forecast in the upcoming World Economic Outlook, but emphasized that there is currently no sign of a looming recession.

President Trump is expected to unveil a new round of “reciprocal tariffs” on Wednesday — dubbed “Liberation Day” — targeting countries that impose tariffs or engage in trade practices deemed unfair to the US. The proposed measures will affect all major US trading partners, including China, the EU, and Canada.

Since returning to office in January, Trump has rolled out tariffs on Chinese goods, Canadian and Mexican imports that fail to meet new standards, steel and aluminum, and more recently, foreign-made automobiles and auto parts.

Georgieva noted that despite growing concerns, the IMF has not yet seen a “dramatic impact” from the new trade measures, suggesting that the current effects are limited to a modest dip in global growth. “The sooner there is more clarity, the better,” she said, warning that prolonged uncertainty can have increasingly negative effects on economic performance.

Her comments come in contrast to a warning issued by Goldman Sachs, which on Sunday raised its estimate of a US recession in the next year to 35%, citing fears that Trump’s trade strategy could stunt growth and fuel inflation.

US stock markets have dropped nearly 10% since mid-February amid concern that escalating tariffs could drag the economy into a downturn.

Still, Georgieva pointed to continued global trade growth and a previously upgraded US economic forecast of 2.7% for 2025 as signs of resilience. She acknowledged that while protectionist policies are reshaping global commerce, trade overall is still expanding.

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