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Economy

IMF warns of sluggish global economic growth amid trade war

The sweeping tariffs imposed by the United States on its trade partners have caused a sharp rift between the European Union and China, including some of the promising economies like India.

News Arena Network - Washington D.C. - UPDATED: April 18, 2025, 04:14 PM - 2 min read

IMF Managing Director Kristalina Georgieva. Image: X


The International Monetary Fund (IMF) has sounded an alarm for the global markets over slow or stagnant growth, with rising inflation, due to global trade disruptions and rising “protectionism.”

 

The sweeping tariffs imposed by the United States on its trade partners have caused a sharp rift between the European Union and China, including some of the promising economies like India.

 

IMF Managing Director Kristalina Georgieva called for immediate and transformative reforms and renewed global cooperation as she previewed the fund’s upcoming World Economic Outlook report.

 

She said, “Financial instability is surging sharply as a costly trade policy “is literally off the charts,” Georgieva said, referencing IMF data that showed a steep rise in global unpredictability. She added that the US effective tariff rate has surged to levels “last seen several lifetimes ago.”

 

While she refrained from mentioning Trump’s policies as one of the key factors for the rising global market instability, she said, a blanket 10 per cent tariff on all imports and much higher rates on Chinese goods, with some products facing tariffs as high as 145 per cent.

 

Also read: India lacks innovations in automobile sector: NITI Aayog

 

In response, China has raised levies on all US imports from 84 per cent to 125 per cent, marking its most significant retaliatory move to date.

 

Several heads of prominent institutions, like the Federal Reserve and the World Bank, have warned about the damaging effects of Trump’s ongoing trade policies.

 

Meanwhile, on Thursday, the European Central Bank cut interest rates, citing “deteriorating growth prospects” due to escalating trade tensions.

 

Earlier this week, French Prime Minister Francois Bayrou said Trump had launched a global trade war “without warning,” criticising him for striking both rivals and allies alike with sweeping tariffs and for dismantling decades of cooperation.

 

European Commission President Ursula von der Leyen called the move a “major blow,” while Spanish Prime Minister Pedro Sanchez condemned the tariffs as “unintelligent,” and Polish Prime Minister Donald Tusk labelled them “unnecessary and stupid.”

 

On Friday, Trump reiterated his stance during a meeting with Italian Prime Minister Giorgia Meloni, stating he is in “no rush” to finalise trade agreements, as he believes tariffs are generating significant revenue for the US.

 

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