Chief IMF Economist Says Global Economy is Entering New Era

(MENAFN) The international economy is entering a transformative phase, marked by historically high tariff rates, a level not witnessed in nearly 100 years, according to the chief economist of the International Monetary Fund (IMF), Pierre-Olivier Gourinchas.

This development signals heightened instability and potential setbacks for global trade relations.

Drawing attention to the IMF's latest analysis on the world economic outlook, Gourinchas noted a significant downward revision in global growth expectations.

This reassessment stems from intensifying trade frictions and considerable unpredictability in policy-making across major economies.

The IMF's projections now indicate that worldwide economic expansion is anticipated to slow to 2.8 percent in 2025, highlighting a more cautious outlook compared to earlier predictions.

Gourinchas explained the impact of tariffs varies across regions: "In the US, tariffs constitute a negative supply shock, with growth revised down and inflation revised up," while "for trading partners like China, tariffs are mostly a negative demand shock, with growth and inflation both revised down."

In response to these challenges, the IMF is urging policymakers to exercise caution and promote enhanced cooperation.

The emphasis, he stated, must be on re-establishing a “clear, stable, and predictable trade environment.” Restoring such conditions is seen as vital for long-term economic resilience.

Furthermore, Gourinchas underscored the importance of flexible monetary strategies, the restoration of financial reserves, and the continuation of structural changes.

“Monetary policy must remain agile; rebuilding fiscal buffers is crucial, and structural reforms remain needed,” he concluded, calling for decisive and coordinated efforts to navigate this complex economic landscape.

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