IMF Warns of Global Economic Slowdown as Trade Tensions Rise
The International Monetary Fund (IMF) has sounded the alarm on the global economy, predicting slower growth and higher inflation. It warns that countries like Germany are at risk of recession due to escalating trade tensions and rising protectionism.
The IMF blames elevated tariff rates, heightened policy uncertainty, disrupted supply chains, and weakened global demand for the economic slowdown. Germany's GDP has stagnated and even contracted after two years of recession, largely due to abrupt changes in US trade policy and tariff unpredictability.
The IMF highlights the negative effects of increased tariffs, geopolitical risks, and inflationary pressures that undermine growth prospects globally. It has lowered its growth projection for the US to 1.8% by 2025 from 2.7%. The core causes of the downturn are identified as trade policy uncertainty, tariff escalation, inflation risks, supply chain disruptions, and fiscal vulnerabilities.
IMF Managing Director Kristalina Georgieva stressed the growing toll of economic uncertainty, stalled investment, and trade disruptions. Despite criticism, US President Donald Trump has stood by his support for tariffs, while European leaders have been critical, describing them as 'launched without warning' and 'unintelligent'. China has retaliated with tariffs ranging from 84% to 125%.
The IMF's warning underscores the need for global cooperation to address trade tensions and policy uncertainties. Without a coordinated effort, the risk of recession in major economies like Germany may increase, further dampening global growth prospects.
