\n<\/p>\n
Global growth will be stronger than previously expected this year after Donald Trump scaled back his most extreme tariff threats, the International Monetary Fund said as it upgraded the economic outlook for 2025.<\/p>\n
The Washington-based organisation said a \u201cde-escalation in tariffs\u201d by the White House had spurred a recovery in global trade and a broader economic expansion, though US policies remain \u201chighly uncertain\u201d and risks to growth \u201cfirmly on the downside\u201d.<\/p>\n
The IMF chief economist, Pierre-Olivier Gourinchas, upgraded the forecast for global growth in 2025 to 3% from an April estimate of 2.8%. The outlook for 2026 was upgraded from 3% to 3.1%. The global economy grew by 3.3% in 2024.<\/p>\n
Most regions benefited from the more benign economic outlook, including Britain, which is expected to grow by 1.2% this year \u2013 0.1 percentage points higher than in the IMF\u2019s April outlook \u2013 an upgrade it first announced in its annual review of the UK economy in May.<\/p>\n
Trump threatened in April to impose severe import tariffs on the world\u2019s biggest exporters of goods, including the UK, EU, China and South Korea, to combat what the US president sees as unfair competition.<\/p>\n
Stock markets dived and the US dollar fell as investors, spooked by the potential hit to world trade, bought safe-haven assets.<\/p>\n
IMF growth forecasts chart<\/p>\n
The US later delayed or reduced tariffs in return for commitments to buy US-made goods, reversing market falls as investors concluded \u201cTrump always chickens out\u201d \u2013 a trade nicknamed Taco for short.<\/p>\n
Trump ended months of speculation at the weekend over whether he would impose 30% tariffs on EU goods imports, saying he would limit the figure to 15% in exchange for concessions from the EU, including the purchase of US oil and gas worth almost \u00a3600bn. The French prime minister, Fran\u00e7ois Bayrou, described the US-EU trade deal as a dark day for Europe.<\/p>\n
Japan recently agreed to buy Boeing planes as part of a deal to limit tariffs on its exports to the US to 15%. Trump has also scaled back tariffs on Chinese goods, but only after Beijing retaliated by imposing punitive tariffs on rare earth metals needed by defence industry manufacturers.<\/p>\n
Gourinchas said the US had \u201cpartly reversed course\u201d, reducing its effective tariff rate from 24% to about 17%, but that tariffs were still \u201chistorically high, and global policy remains highly uncertain, with only a few countries having reached fully fleshed-out trade agreements\u201d.<\/p>\n
The White House has set a deadline of 1 August for several countries, including Vietnam and South Korea, to sign deals.<\/p>\n
\u201cWithout comprehensive agreements, the ongoing trade uncertainty could increasingly weigh on investment and activity,\u201d Gourinchas said.<\/p>\n
He said the situation could also worsen should attacks on central banks intensify, undermining their authority. Trump has repeatedly called on Jerome Powell, the chair of the Federal Reserve, to cut interest rates, calling him a numbskull for failing to do so.<\/p>\n
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Sign up to Business Today<\/span><\/p>\n Get set for the working day \u2013 we’ll point you to all the business news and analysis you need every morning<\/p>\n Privacy Notice: <\/strong>Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Privacy Policy. We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply.<\/span><\/p>\n after newsletter promotion<\/p>\n Gourinchas said: \u201cIt is important to reaffirm and preserve the principle of central bank independence. The evidence is overwhelming that independent central banks, with a narrow mandate to pursue price and economic stability, are essential to anchoring inflation expectations.<\/p>\n \u201cThat central banks around the world achieved a successful \u2018soft landing\u2019 despite the recent surge in inflation owes a great deal to their independence and hard-earned credibility.\u201d<\/p>\n In line with how markets are betting, the IMF expects the Bank of England to cut interest rates twice this year to 3.75%, but said rising inflationary pressures in the US and the UK could undermine market expectations. The City expects the Bank to make the first reduction to 4% on Thursday next week.<\/p>\n The chancellor, Rachel Reeves, said the IMF\u2019s forecasts meant the UK remained the fastest-growing European economy in the G7 \u201cdespite the global economic challenges we are facing\u201d.<\/p>\n Under pressure to overcome spending contraints to boost the economy, she said investment plans were on track in \u201ccity region transport, record funding for affordable homes, as well as backing major projects like Sizewell C\u201d.<\/p>\n Trade data released on Tuesday showed that imports of goods into the US fell by $11.5bn (\u00a38.6bn) in June, to $264.2bn, after a rise in imports earlier this year as companies tried to beat Trump\u2019s tariffs.<\/p>\n This narrowed the US trade deficit to $86bn in June, down from $96.4bn in May.<\/p>\n","protected":false},"excerpt":{"rendered":" Global growth will be stronger than previously expected this year after Donald Trump scaled back his most extreme tariff threats, the International Monetary Fund said as it upgraded the economic outlook for 2025. The Washington-based organisation said a \u201cde-escalation in tariffs\u201d by the White House had spurred a recovery in global trade and a broader<\/p>\n","protected":false},"author":1,"featured_media":13047,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49],"tags":[3799,1404,2213,1123,3841,6654,982,72,81,6744,1060],"class_list":{"0":"post-13046","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-ease","9":"tag-economy","10":"tag-forecast","11":"tag-global","12":"tag-growth","13":"tag-imf","14":"tag-risks","15":"tag-tariffs","16":"tag-trump","17":"tag-upgrades","18":"tag-warns"},"_links":{"self":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/13046","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=13046"}],"version-history":[{"count":0,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/13046\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/media\/13047"}],"wp:attachment":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=13046"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=13046"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=13046"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}