I.M.F. Raises Global Growth Outlook as U.S. Looks to Avert Trade Wars
The International Monetary Fund, in its world economic outlook released on Tuesday, projects 3 percent global growth this year. That is higher than the 2.8 percent it forecast after Mr. Trump announced his 'Liberation Day' tariffs in April, while down from the 3.3 percent it predicted in 2024.
Mr. Trump announced plans in April to raise tariff rates to their highest levels since the Great Depression, sending markets tumbling and causing economists to predict a downturn. Since then, the Trump administration has been negotiating trade deals with some of America's largest trading partners and has delayed or reduced some of the tariffs.
The I.M.F. is currently projecting an effective tariff rate in the United States of 17.3 percent, down from its April forecast of 24.4 percent but still a historically high level that is a result of Mr. Trump's imposing tariffs on all of the United States' trading partners. The outlook was also buoyed by the fact that importers rushed to make purchases before tariffs took effect and because of the tax cuts that Republicans passed that could stimulate the U.S. economy.
The I.M.F. expects the U.S. economy to grow 1.9 percent this year, down from 2.8 percent in 2024. Output in the euro area is projected to accelerate to 1 percent from 0.9 percent last year. Europe's outlook was revised higher because U.S. importers rushed to buy Irish pharmaceutical exports ahead of tariff increases.
China's economy is forecast to grow 4.8 percent. That is down from 5 percent in 2024 but stronger than the 4 percent that the I.M.F. projected three months ago. The Chinese economy has benefited as companies have stocked up on its exports to get ahead of potential tariff increases.
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