HUNTSVILLE, Ala. (WHNT) — The International Monetary Fund predicts “significantly slower” economic growth on a global scale than what it predicted in January of this year, saying tariffs and the trade war are causing too much economic uncertainty.
“The global economic system under which most countries have operated for the last 80 years is being reset, ushering the world into a new era.”
Pierre-Olivier Gourinchas, International Monetary Fund
The IMF predicted a 2025 global economic growth rate of 3.3% in January. Today, that prediction dropped to 2.8%.
The IMF predicted a 2025 United States economic growth rate of 2.7%. Today, that prediction dropped to 1.8%.
While those percentage margins may seem small, they could be equivalent to billions of dollars over time.
“Globally, this has an impact on everyone because if we buy less, or we buy fewer, goods from China or a different country, it means all our imports and our consumption is lower,” UAH College of Business Associate Dean Wafa Hakim Orman said. “It means for them their exports are lower, so it’s going to reduce growth there as well. So it reduces growth for us, and it reduces growth in all the countries that we buy products from.”
With economic uncertainty looming for the past couple of months due to on-and-off tariffs, Orman said higher checkout totals may still be right around the corner.
“Right now, a lot of sellers are just going through their inventories,” Orman said. “Once they run out of their inventory and they’re going to have to purchase new supplies either domestically or from a foreign country, I think that’s when we should see the impacts of these tariffs come in.”
Orman adds that economic impacts could stretch further than some initially imagine, even affecting tourism-reliant industries here at home.
“If economic growth is slower in their country, then a lot fewer of them are going to be able to take vacations in the United States,” Orman said. “So those effects can be pretty broad, not just narrowly focused on the things we buy at Walmart or Target, about to get more expensive.”
If the predictions of slower economic growth are correct, some countries may face what is commonly known as a “growth recession”. It is not a true recession, but it has many similar qualities, like higher unemployment rates and significantly lower consumer spending.
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