The International Monetary Fund (IMF) expects global economic growth to slow slightly due to trade tensions sparked by President Donald Trump’s aggressive tariff policies, but a near-term recession remains unlikely, IMF Managing Director Kristalina Georgieva said Monday.

In her first major interview since Trump’s return to the White House, Georgieva acknowledged growing concerns over investor and consumer confidence but urged against panic. “We don’t see recession on the horizon,” she said in a Reuters NEXT Newsmaker interview. However, she warned that high-frequency economic indicators suggest a weakening in confidence, which could eventually weigh on growth.

Tariffs and Trade Tensions

Since his return to office in January, Trump has enacted sweeping tariffs, including:

  • A 20% tariff on all Chinese goods,
  • Steep levies on steel and aluminum imports,
  • A 25% tariff on imported automobiles, and
  • Temporary delays on threatened 25% tariffs on Canadian and Mexican goods.

Additionally, Trump has announced that April 2 will mark “Liberation Day,” when he plans to unveil new “global reciprocal tariffs.” The specifics of this policy remain unclear, but the move is expected to further disrupt international trade relations.

While these measures have fueled uncertainty, Georgieva said their impact on global growth has so far been moderate. “Trade developments could dampen growth in the U.S. a little bit,” she noted, though she maintained that the overall economic outlook for the country remained “OK.”

IMF Revising Economic Outlook

The IMF had previously raised its 2025 global growth forecast to 3.3%, largely due to stronger-than-expected U.S. growth projections of 2.7%. However, Georgieva now expects a small downward revision in the IMF’s next World Economic Outlook update, due in April.

Despite this expected adjustment, she stressed that the impact of Trump’s tariffs had not yet reached a “dramatic” level. The bigger concern, she said, is that many countries exhausted their fiscal and monetary tools during the COVID-19 pandemic and are now burdened with high debt, limiting their ability to respond to future shocks.

A slowdown in disinflation could also pose challenges, as it may delay interest rate cuts, making it harder for countries to refinance their debts.

Georgieva also pointed to other significant economic trends:

  • Europe: Increased defense spending and Germany’s repeal of its debt brake could slightly improve growth projections for the region.
  • China: The world’s second-largest economy needs to shift toward boosting domestic consumption to sustain its growth.

As trade tensions escalate, many countries are reassessing their economic strategies. The full impact of Trump’s policies remains to be seen, but for now, the IMF remains cautiously optimistic about global stability.

“The world economy has proven resilient before,” Georgieva said. “The key is to avoid overreaction and maintain long-term focus on stability.”

The IMF’s updated economic projections will be released during its spring meetings in Washington next month.

(Inputs from Reuters)

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