IMF Warns of Slower Global Growth Amid Trump’s Trade Tensions

The global economy may be wobbling, but a full-blown recession isn’t part of the forecast—at least not yet. That’s the message from International Monetary Fund (IMF) Managing Director Kristalina Georgieva, who addressed reporters in Washington on Thursday ahead of the IMF and World Bank’s annual Spring Meetings.

While she acknowledged that US President Donald Trump’s stop-start tariff rollout is weighing heavily on global markets and growth, she said the IMF doesn’t currently expect the downturn to go as far as a recession.

According to Georgieva, the recent volatility is a sign of how rapidly the global landscape can shift. “This is a reminder that we live in a world of sudden and sweeping changes,” she said, noting that the IMF now anticipates “notable” downgrades to global growth projections. Still, she urged calm and encouraged world leaders to respond wisely and strategically.

Trump’s sporadic tariff announcements have triggered sharp movements in global financial markets—levels of volatility not seen since the COVID-19 crisis. Economists widely agree that these trade disruptions will likely stifle economic growth and push up inflation in the short term.

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The IMF is expected to revise its global growth outlook downward from the previously projected 3.3% for 2025 and 2026 when it publishes its World Economic Outlook next week.

Georgieva explained that rising trade tensions are creating layers of complexity for governments and businesses alike. She emphasized that uncertainty makes it difficult for businesses to plan ahead, especially when the cost of imported goods is unclear. That instability is already discouraging investment and delaying decision-making.

She also noted that new trade barriers, such as tariffs, tend to hit economic growth almost immediately. While they may generate short-term revenue for governments, they also reduce economic activity by making goods more expensive and supply chains more fragile.

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Over time, she warned, such protectionist measures could erode productivity, especially in smaller and emerging economies that rely heavily on trade to fuel their growth.

Rather than escalating the current trade standoff, Georgieva called on countries to focus on strengthening their own economic foundations. She encouraged governments to adopt responsible fiscal policies, particularly where public debt is surging.

At the same time, she stressed the importance of independent and credible central banks, capable of responding to challenges without political interference.

The IMF also offered specific policy advice to major economies. For the United States, Georgieva highlighted the urgency of addressing its ballooning national debt.

In China’s case, she urged a shift away from an export-driven, state-supported growth model and toward boosting domestic consumption. For the European Union, she emphasized the need to enhance competitiveness through deeper integration of the single market.

As head of an organization that has consistently advocated for open markets and global cooperation, Georgieva made a broader plea for unity. She called on the world’s largest economies to work toward a more balanced trade system—one that reduces both tariff and non-tariff barriers, restores fairness, and supports long-term global stability.

“In trade policy, the goal must be to secure a settlement among the largest players that preserves openness and delivers a more level playing field,” she said. “We need a more resilient world economy, not a drift to division.”