The conflict in the Middle East is expected to further worsen the already strained global economic outlook, according to Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), in an interview with Euronews. “Being hit by a trade war has consequences. We have forecasted a half-point percentage drop in global growth,” Georgieva stated, adding that the current turbulence adds uncertainty, which negatively impacts businesses.
Since Donald Trump’s return as leader of the world’s largest economy, international trade has been disrupted by a wave of tariffs imposed by the U.S. administration on its global partners. Initially targeting Mexico and Canada, this was followed by a prolonged trade standoff with China, where reciprocal tariffs surged over 100%. On April 2, which Trump dubbed “Liberation Day,” he imposed tariffs on a wide range of countries, including the EU. A 90-day truce was declared, expiring on July 9, with ongoing negotiations between the U.S. and the EU, which currently faces 50% tariffs on steel and aluminum, 25% on automobiles, and 10% on all its exports to the U.S.
Georgieva emphasized that diversifying trade partners is key. Despite challenges, she noted that the global economy has shown remarkable resilience to shocks, which continues to hold. “We live in a world more prone to shocks, a world of greater uncertainty,” Georgieva remarked, urging countries to implement domestic reforms to strengthen their economies. She expressed optimism about economic prospects, citing the recent trade agreements between the U.S. and China, as well as a parallel deal with the UK, as positive signs: “We are in a better place.”
— new from Euronews