Three weeks after US President Donald Trump escalated global trade tensions, fresh forecasts are beginning to reveal the economic fallout. On Tuesday, the International Monetary Fund (IMF) is set to cut its global growth projections, marking the first official downgrade since sweeping tariffs were imposed on April 2.
IMF Managing Director Kristalina Georgieva said the new outlook will show โnotable markdowns, but not recession,โ alongside upward revisions to inflation in some countries. However, she warned that prolonged uncertainty could strain financial markets.
On Wednesday, coordinated purchasing manager indexes (PMIs) from the US, Europe, and Japan will offer a clearer view of how manufacturing and services sectors are reacting. Business sentiment surveys from major economies are also expected to reflect early trade war tremors.
According to economists, the IMF often underestimates initial shocks during crises โ historically by about 0.5 percentage points. So, while the current downgrades may seem modest, the real impact could be worse.
Federal Reserve Chair Jerome Powell said the US central bank is in no rush to shift policy, preferring to โwait for greater clarity.โ Meanwhile, European Central Bank President Christine Lagarde admitted that itโs still too early to tell if the worst of the uncertainty has passed.As G20 finance ministers gather in Washington this week, hopes remain that diplomacy might cool tensions and stabilize global markets