The US growth forecast for this year has been given the biggest downgrade among advanced economies by the International Monetary Fund (IMF) as a result of uncertainty caused by trade tariffs. Growth is now expected to be 1.8% this year, down from the IMF's estimate of 2.7% for the US in January. The sharp increase in tariffs and uncertainty will lead to a "significant slowdown" in global growth, the Fund predicts. The forecast for the UK has also been cut, with the economy now expected to grow by 1.1% this year. The predictions come as top economic policymakers gather in Washington for the spring meetings of the IMF and World Bank. IMF chief economist Pierre-Oliver Gourinchas said the global economy "still bears significant scars" from the "severe shocks of the past four years". "It is now being severely tested once again," he added. President Donald Trump has made a flurry of announcements on tariffs this year - taxes charged on goods brought into the US from other countries. In a growing trade war, the US has placed tariffs of up to 145% on Chinese goods, while China has hit back with 125% on US products. The US has also introduced a 10% tax on goods from the vast majority of other countries, while pausing much higher rates for dozens of nations for 90 days. Trump says tariffs will encourage US consumers to buy more American-made goods, increase the amount of tax raised and lead to huge levels of investment in the country. However, the IMF highlighted the potential negative impact on global trade given that modern supply chains are so interlinked. Uncertainty around trade policy was a "major factor" behind the growth downgrades, Mr Gourinchas said. "Faced with increased uncertainty... many firms' initial reaction will be to pause, reduce investment and cut purchases." The IMF predicts the global economy will grow by 2.8% this year, down from its previous forecast of 3.3%, and by 3.0% in 2026. The downgrade to the US growth forecast was due to greater policy uncertainty, trade tensions and slower than expected consumer spending, the IMF said. Tariffs are also expected to hit growth in 2026. The IMF said the probability of a recession in the US this year was now assessed at 40%, higher than its estimate of 25% in October last year. Earlier on Tuesday, banking groupthe Institute of International Financesaid it expected "a shallow recession" in the US later this year, with negative growth in the third and fourth quarters of 2025. A shallow recession is now embedded in our baseline, with negative sequential growth in Q3 and Q4 of 2025 China is expected to grow by 4% this year, down from the IMF's previous estimate of 4.6%. In the UK, the downward revision reflects the impact of tariffs, higher government borrowing costs, and weaker consumer spending as a result of higher bills and energy costs. However, the IMF's 2025 prediction for the UK is now close to the1% growth forecast by the government's Office for Budget Responsibility(OBR) last month. The IMF expects the UK to grow by 1.4% next year. Responding to the forecast, Chancellor Rachel Reeves said it showed the UK was still the fastest growing European G7 country. The IMF's World Economic Outlook also contains the following forecasts: Forecasts are never perfect given the many factors that affect economic growth, and the IMF acknowledged its latest predictions had been particularly challenging. The figures given are what the IMF calls its "reference forecast" based on the situation as at 4 April, which was two days after Trump's announcement of wide-ranging tariffs. Mr Gourinchas said that while the reference forecast was the IMF's central scenario, "many possible paths exist, reflecting the unpredictability surrounding future trade policy and the varied impact of tariffs across different countries". The IMF also looked at the situation after the US temporarily suspended many tariffs while raising those on China sharply. Mr Gourinchas said the tariff pause did not "materially" change the global outlook from its reference forecast, because the overall effective tariff rate of the US and China remains high and uncertainty about the policy continues.
Global growth forecast slashed by IMF over tariff impact
TruthLens AI Suggested Headline:
"IMF Lowers Global Growth Forecast Amid Rising Trade Tariff Uncertainty"
Bbc News
7.1
TruthLens AI Summary
The International Monetary Fund (IMF) has significantly downgraded its growth forecast for the United States for 2023, reflecting the adverse impacts of escalating trade tariffs and policy uncertainty. The updated estimate now stands at 1.8%, a notable decline from the 2.7% projected earlier in January. This downgrade positions the US as experiencing the largest reduction among advanced economies, with the IMF warning that these tariff increases are likely to lead to a 'significant slowdown' in global economic growth. The organization now anticipates a global growth rate of 2.8%, down from the previous forecast of 3.3%. The forecasts were released as key economic officials gathered for the IMF and World Bank's spring meetings in Washington. IMF chief economist Pierre-Oliver Gourinchas emphasized that the global economy is still reeling from the 'severe shocks of the past four years' and is facing further challenges due to rising trade tensions. He noted that uncertainty surrounding trade policies is a critical factor influencing firms' investment decisions, leading many to pause or reduce their spending in reaction to the unpredictable economic landscape.
In addition to the US, the UK has also seen its growth forecast lowered, now expected to grow by 1.1% this year, driven by similar concerns over tariffs and weakened consumer spending. The IMF's analysis indicates that high government borrowing costs and rising energy expenses are contributing to this downturn. Meanwhile, China's growth forecast has been adjusted to 4%, down from 4.6%. The IMF's outlook includes a concerning assessment of a 40% probability of a recession in the US within the year, a significant increase from previous estimates. The situation is further complicated by the banking group's predictions of a 'shallow recession' in the US, suggesting negative growth in the latter half of 2025. As the IMF continues to monitor these developments, it acknowledges the inherent unpredictability of forecasting in the current climate, especially in light of the US's recent tariff policies and their global ramifications.
TruthLens AI Analysis
The article provides an insightful overview of the recent downgrade in global growth forecasts by the International Monetary Fund (IMF), particularly highlighting the implications of trade tariffs imposed by the United States. This analysis unpacks the underlying motives, societal perceptions, and potential implications of such economic news.
Economic Impact and Policy Implications
The significant downgrade of the US growth forecast from 2.7% to 1.8% signals a serious concern within advanced economies regarding the effects of trade tariffs. The IMF's assertion that these tariffs will lead to a "significant slowdown" in global growth reflects a broader anxiety about the interconnectedness of global supply chains. With the US and China engaged in a trade war, the economic repercussions are likely to extend beyond just these two nations, affecting global markets and trade dynamics.
Public Perception and Emotion
This report may aim to instill caution among consumers and investors, as the IMF stresses the "significant scars" left by past economic shocks. By emphasizing uncertainty, the article may be attempting to foster a sense of urgency for policymakers to reconsider their tariff strategies. The language used, particularly phrases like "severe shocks" and "significant slowdown," serves to heighten the emotional response to the economic situation, potentially swaying public opinion against current trade policies.
Information Control and Transparency
There might be an underlying intention to draw attention away from other pressing issues by focusing on the tariff impacts. The narrative centers on economic forecasts, which, while crucial, can overshadow discussions on broader social and political factors influencing the economy. The focus on tariffs may serve to simplify complex economic interactions, leading the public to overlook other contributing factors to economic health.
Manipulative Potential
This article carries a moderate level of manipulativeness due to its selective emphasis on the negative aspects of tariffs without equally highlighting potential benefits, such as increased domestic production. The language suggests a bias towards viewing tariffs as harmful rather than exploring a nuanced perspective that includes potential strategic advantages.
Comparative News Context
When compared to other economic reports, the focus on a singular aspect—tariffs—can create a narrative that aligns with certain political agendas, particularly those critical of President Trump's policies. The media outlet may be positioning itself within a broader discourse that questions the efficacy of current economic strategies, creating connections with other critical articles that discuss the ramifications of protectionist policies.
Societal and Economic Scenarios
The implications of this report could lead to increased volatility in financial markets as businesses react to the forecasted slowdown. Companies may delay investments and hiring, which could further exacerbate economic stagnation. The article may resonate more with communities that are adversely affected by tariff policies, such as manufacturers reliant on global supply chains, potentially rallying support for policy changes.
Market Reactions and Impacts
This kind of news can trigger fluctuations in stock markets, particularly for companies heavily reliant on international trade. Industries such as technology and manufacturing may experience significant impacts, leading to shifts in stock performance as investors react to perceived risks in trade policies.
Global Power Dynamics
Considering current global tensions, this article reflects the ongoing struggle for economic dominance between the US and China. The themes discussed resonate with current geopolitical discussions, emphasizing how economic strategies can influence global power dynamics.
In conclusion, while the article presents factual data regarding growth forecasts, its framing and language suggest a particular narrative that may influence public perception and policymaking. The analysis indicates a moderate level of manipulativeness, primarily through its selective emphasis and emotional language, which could sway public opinion against current tariff strategies.