Capital Economy, Business and Finance
The IMF has jettisoned its predictions for the world economy in the wake of Donald Trump’s sweeping tariffs, forecasting lower global growth than it did in January.
The US and UK both had upward revisions in inflation and downgrades in growth for this year, of 0.9 and 0.5 percentage points respectively.
Spain was an outlier among advanced economies, with growth revised upwards to 2.5 per cent for 2025.
IMF chief economist Pierre-Olivier Gourinchas said the global economy was being “severely tested” not only by high tariffs, but also policy uncertainty leading to investment “pauses” and the “revaluation of credit” by banks.
Gourinchas also defended the independence of central banks after Trump’s threats to oust Federal Reserve chair Jay Powell pushed US markets and bond prices lower on Monday.
The rise in Treasury yields since Trump’s tariffs were announced has increased US government interest payments by more than all of Doge’s savings to date.
