By Christopher Rugaber, Associated Press Economics writer
Washington (AP) – The prospects of American and global economies have worsened considerably following the prices of President Donald Trump and the uncertainty they created, the International Monetary Fund announced on Tuesday.
The IMF said that the global economy would only increase by 2.8% this year, down compared to its forecasts in January by 3.3%, according to its last global economic prospects. And in 2026, global growth will be 3%, predicted the fund, also below its previous estimate of 3.3%.
The economic growth of the United States will only have 1.8% this year, down sharply compared to its previous 2.7% forecasts and to a complete percentage point below its expansion in 2024. The IMF does not expect an American recession, although it has increased its chances by a year by 25% to 37%.
Forecasts are largely in line with the expectations of economists in the private sector, although some fear that a recession is increasingly likely. JPMorgan economists say that the chances of an American recession are now 60%. The federal reserve also planned that growth will be weakening this year, at 1.7%.
“We are entering a new era,” said Pierre-Olivier Gourchas, chief economist of the IMF. “This global economic system that has been operating for eighty years is being reset.”
The IMF is an organization of loans at 191 nations which strives to promote economic growth and financial stability and to reduce global poverty.
Gourinchas said that increased uncertainty around import taxes has led the IMF to take the unusual measure to prepare several different scenarios for future growth. Its forecasts were finalized on April 4, after the Trump administration announced scanning prices on nearly 60 countries as well as tasks of nearly 10%university.
These tasks were interrupted on April 9 for 90 days. Gourinchas said that the break had not considerably changed the IMF forecasts because the United States and China have since imposed themselves during the steep prices.
The uncertainty surrounding the next movements of the Trump administration will also strongly weigh on American and global economies, the IMF said. Companies can withdraw investments and expansion while waiting to see how commercial policies are taking place, which can slow growth.
China should also grow more slowly due to American prices. The IMF now expects it to increase 4% this year and next year, down approximately half a point compared to its previous forecasts.
While the American economy will probably undergo a “supply shock”, similar to what hampered during the pandemic and which pushed inflation in 2021 and 2022, Gourinchas said that China should undergo a reduced demand as American purchases of its exports fall.
Inflation will probably aggravate in the United States, going to around 3% by the end of this year, when it will be little changed in China, IMF forecasts.
The European Union should grow more slowly, but the price of prices is not as important, in part because it faces American tasks lower than China. In addition, part of the success of the prices will be offset by stronger public spending in Germany.
The savings of the 27 countries that use the euro should develop 0.8% this year and 1.2% next year, down 0.2% in the two years from the IMF forecast.
Japan growth forecasts were marked at 0.6% this year and next year, 0.5% and 0.2% lower than January, respectively.
Originally published:
California Daily Newspapers
