IMF claims: US tariffs will weaken global economy, increase inflation; Tariffs will not cause recession

New Delhi| The International Monetary Fund (IMF) has claimed that the increase in US tariffs will weaken the global economy. Apart from this, inflation will increase this year. However, the increase in import duties will not cause a global recession. This estimate of IMF will be released next week i.e. on Tuesday.

IMF Managing Director Kristalina Georgieva said that tariffs imposed by the Trump administration have increased global uncertainty. He said import taxes would slow global growth, but not cause a worldwide recession. He said the strength of the world economy is being tested as major changes are taking place in the global trading system, and these changes could lead to turmoil in financial markets. He said that this unrest has been going on in the financial markets for the last few weeks. Especially on Wall Street, which has experienced day-to-day and often hour-to-hour fluctuations.

Appeal to countries to reduce tariffs
IMF chief Georgieva also reiterated some of the Trump administration’s concerns. He appealed to countries to reduce their tariffs and other barriers to trade. “Trade distortions-tariff and non-tariff barriers-have fueled negative perceptions of the multilateral system, which has failed to provide a level playing field for all”, he said. In some places it seems that something wrong is happening to them. They believe that they follow the rules, while others break the rules and take advantage

Tariffs cause uncertainty
Georgieva said tariffs cause uncertainty, which can be costly. He said that due to the complexity of supply chains, tariffs in dozens of countries could affect the cost of a single commodity. He noted that increased trade barriers also affected growth immediately, and that while this could lead to higher domestic production, it took time to implement.

The estimate released in January was expected to reduce inflation
In its most recent projections, released in January, the IMF projected the world economy to grow at a nominal pace and inflation to decelerate. However, the IMF also warned that President Donald Trump’s policies, including tax cuts and increased tariffs on foreign imports, had reduced prospects. However, January forecasts are likely to change. In addition, the Washington-based lending agency said at the time that it expected the world economy to grow 3.3 percent this year and next, up from 3.2 percent in 2024.