IMF: China-US Tariffs Are the Key, Trump's Suspension of Most Country Tariffs Doesn't Matter

The IMF significantly downgraded its global economic growth forecasts for this year and next.

On April 22, the International Monetary Fund (IMF) released the latest "World Economic Outlook", cutting this year's global output growth forecast to 2.8%, down from 3.3% in January, marking the slowest growth since the COVID-19 pandemic in 2020 and the second-worst performance since 2009. The forecast for next year's growth was also revised downward accordingly.

The IMF pointed out that the global trade war triggered by US tariff measures poses further downside risks to the global growth outlook. The trade war will cause a supply shock to the US, pushing up prices and dragging down productivity; while forming a demand shock to its trading partners, suppressing output and prices. Moreover, the actual tariff rate in the US has risen to the highest level in a century. Gita Gopinath, the IMF's Chief Economist, said that the global economic system is resetting.

This forecast is based on data before April 4th and does not include subsequent situations such as tariff suspensions and exemptions. The US and China are among the countries with the largest downgrades. The US GDP growth rates for this year and next are expected to be 1.8% and 1.7%, respectively, down by 0.9 and 0.4 percentage points; China's economic growth rates for this year and next are both expected to be 4%, down by 0.6 and 0.5 percentage points respectively. Meanwhile, the IMF raised its overall inflation forecast for developed economies in 2025, with the 2025 inflation rate forecast for the US adjusted upward by about 1 percentage point to 3%.

The IMF stated that the pressure on central banks of various countries to control inflation depends on whether the tariffs are temporary or permanent. If the tense trade situation eases and issues like non-tariff barriers are resolved, the world economic growth prospects will improve; but given the uncertainty of trade policy, various scenarios are still possible.

Source: https://www.toutiao.com/article/1830174356145152/

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