US President Donald Trump’s push for sweeping tariffs is creating more uncertainty and undermining confidence but is unlikely to trigger a recession in the near term, International Monetary Fund Managing Director Kristalina Georgieva said.
The IMF is likely to lower its economic forecast slightly in its next updated global economic outlook in about three weeks, but “we don’t see a recession on the horizon,” Georgieva told Reuters.
“What we see in the high-frequency indicators does indicate that consumer confidence and investor confidence is weakening a little bit, and we know that that then affects the growth outlook,” she said.
However, the IMF has yet to see the “dramatic impact” of the duties that Trump has imposed and threatened since his return to the White House, she said.
In January, the IMF raised its estimate of global economic growth for 2025 to 3.3 per cent from 3.2 per cent.However, Georgieva now expects the WEO update to be released in April, when the IMF holds its spring meetings in Washington, to reflect a small correction, she said.
Georgieva noted that many countries used up their fiscal and monetary space during COVID and now have high levels of debt, which limits their ability to respond to future shocks. Any slowdown or reversal in inflation could slow interest rate cuts and make it more difficult for countries to refinance debt.
The unpredictable pace of the announcement and implementation of the duties has tainted investor attitudes, with major US stock indexes falling nearly 10 per cent since mid-February on fears the duties will slow growth or even trigger a recession.
“The sooner there is clarity, the better, because uncertainty, as our research shows, the longer it lasts, the more it can negatively impact growth,” she said.
Georgieva said global trade continues to grow despite a surge in protectionist measures around the world that have changed trade patterns and challenged globalisation, and that trade in services is outpacing growth in trade in goods.
Upon his return to the White House in January, Trump
- imposed 20 per cent duties on all goods from China;
- threatened and then delayed 25% duties on most goods from Canada and Mexico; and
- imposed high duties on steel and aluminium imports;
- announced 25% duties on imported cars;
- and announced that 2 April would be “Liberation Day” when he plans to unveil global reciprocal tariffs.