IMF, Global economic growth rate significantly downgraded from 3.3%→2.8%

IMF that downgraded economic growth rate due to global trade uncertainty (Source: Reuters)

The International Monetary Fund (IMF) has significantly lowered its global economic growth forecast for this year and next year. An assessment has been reflected that President Trump's tough tariff policies and the retaliatory actions of responding countries are shaking the global trade environment.

In the World Economic Outlook (WEO) report released on the 22nd local time, the IMF predicted the global economy would grow by 2.8% this year. This figure has been downgraded by 0.5 percentage points from the forecast earlier in January this year. Next year's growth rate is also presented as 3.0%, down 0.3 percentage points.

As the U.S. tariff hikes have a broad impact on the global economy, major countries are also expected to avoid growth slowdowns. The IMF forecast the US economic growth rate for this year at 1.8%, 0.9 percentage points lower than previously, and 1.7% for next year. These figures are down 0.9 percentage points and 0.4 percentage points, respectively, compared to January.

China's economic growth rate is no exception. The IMF forecast that China would grow by 4.0% for both this year and next year, which is a decrease of 0.6 percentage points and 0.5 percentage points from before.

Both developed and developing countries are expected to have unavoidable economic slowdowns. Developed countries are predicted to record 1.4% growth this year and 1.5% next year, while developing countries are presented at 3.7% and 3.9%, respectively. All forecasts have decreased by a maximum of 0.5 percentage points compared to the January outlook.

The IMF also sharply reduced South Korea's growth rate. It is expected to be 1.0% this year and 1.4% next year, with downgrades of 1.0 percentage points and 0.7 percentage points, respectively.

This report was prepared based on data compiled as of the 14th. The IMF explained that the actual tariff rate imposed by the United States on Chinese products reaches 115%, and the average actual tariff rate targeting all countries is also as high as 25%. This is a sharp increase compared to less than 3% in January. On the other hand, China’s actual tariff rate on the U.S. is calculated at 146%.

The IMF assessed, after President Trump declared reciprocal tariffs on the 2nd of this month, that "unprecedented tariff hikes have materialized in the past 100 years." They continued to state, "Such measures are giving significant negative shocks to the world economy, and trade policy uncertainty is adversely affecting future growth prospects."

This adjustment has also been significantly influenced by the U.S. tariff strengthening on strategic industries such as steel and aluminum, including Canada, Mexico, and China. The IMF also presented a global trade growth forecast this year that was lowered by 1.5 percentage points to 1.7%.

The IMF urged governments to cooperate in minimizing trade conflicts. The report emphasized, "Predictable and stable trade environments are necessary for sustainable growth," adding that "The international community must overcome the common crisis through greater transparency and cooperation."