IMF warns trade tensions cloud global economic outlook
The International Monetary Fund (IMF) announced it will update its global economic growth forecast at the end of July.
However, it warns that persistent trade tensions continue to overshadow the outlook, and economic uncertainty remains high, Reuters reports.
Gita Gopinath, the IMF's First Deputy Managing Director, stated that while financial conditions have improved and inflation shows signs of easing, downside risks continue to dominate. Speaking before G20 Finance Ministers gathered in South Africa, Gopinath emphasized that continuous pressure persists on trade flows and financing conditions, especially in emerging economies.
"Despite some positive developments – such as the reorientation of trade flows and better financial conditions – uncertainty is still very high, and trade tensions are increasing global risks," Gopinath said, according to the text prepared for the G20 meeting.
In April, the IMF cut its global growth forecast for 2025 by 0.5 percentage points, to 2.8%, citing record-high U.S. trade tariffs – the highest in a century. Economists now expect a slight positive revision to the figures, but the institution warns that the outlook remains fragile.
Gopinath urged countries to take action to resolve trade disputes, reduce domestic fiscal imbalances, and put public debt on a sustainable path. She also called for the respect of central bank independence, a theme also included in the official G20 communiqué.
Emerging Markets: Capital flows slow but stable
Regarding emerging markets and developing economies, the IMF notes that capital flows are slow but resilient, even in the face of increased uncertainty and volatility. However, financing conditions remain restrictive for many borrowers.
Gopinath reiterated the IMF's call for efficient and timely debt restructuring for highly indebted countries and advocated for expanding middle-income countries' access to the G20 debt restructuring mechanism – known as the Common Framework.
The IMF's message is clear: while some positive signals are emerging, the global economy remains vulnerable, and progress largely depends on resolving trade disputes and the careful management of fiscal and monetary policies at the national level.
Translation by Iurie Tataru
