IMF managing director Kristalina Georgieva has stated that the International Monetary Fund’s (IMF) latest World Economic Outlook report for global growth projections will have notable drops due to the uncertainty brought about by rising trade tensions, particularly Trump’s tariffs and resulting reciprocal measures, though no global recession is expected.
Georgieva stated, “In a multi-polar world, where things are made may matter more than how much they cost, the logic of national security says that a broad range of strategic goods, from computer chips to steel, must be made at home, and that this is worth paying for. Self-reliance is staging a comeback,” underlining the prioritization of localized production of goods like steel over their cost.
According to Georgieva, global trade tensions are “boiling over”, largely as a result of an erosion of trust in the international system and trust between countries and these tensions create costly uncertainty. Moreover, the cost of rising tariffs is borne by both importers, who are burdened by lower profits, and consumers, who pay some part of tariffs through higher prices. Georgieva pointed out that, all in all, protectionism damages productivity in the long-term. She also urged EU countries to ease fiscal conditions and strengthen integration to promote growth and increase resilience.