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Threats to global growth are increasing as the commercial shock led by the US destroys confidence and clashing financial markets, according to research for financial times ahead of main meetings of economic policymakers in Washington this week.
Confidence indicators have fallen sharply while financial market conditions have deteriorated, according to Brookings -ft tracking indices for global economic recovery, or Tiger. Deterioration in a global point of view is a noticeable contrast to the relatively strong start of the year.
Eswar Prasad, an old associate at the Brookings Institution, said it would be “premature” to predict a worldwide recession, but warned that the breakdown of global trade and the uncertainty of higher policies would significantly suppress growth.
“We’ve seen this great shock,” Prasad said. “Economydo an open economy based on trade will squeeze, and on top of this you will have (negative) trust effects.”
The findings come while economic policymakers and finance ministers from around the world gather in Washington for the first group of World IMF/Bank’s spring meetings since Donald Trump’s inauguration as US President.
Crystalline Georgieva, the IMF management director, on Thursday warned that the fund was preparing to reduce growth forecasts, as the instability of financial markets is raised “and” the uncertainty of commercial policy is literally outside the tables “.
In January the fund predicted a global growth of 3.3 percent this year and the next, with the SH.BA set for an expansion of 2.7 percent this year and 2.1 percent in 2026.
Trump’s decision to announce comprehensive fees for most of America’s trade partners on April 2 placed in sharp trains in financial markets and a low number of growth forecasts.
The European Central Bank on Thursday cut its main interest rates to 2.25 percent while preparing for the consequences of trade wars, warning that the view of growth was deteriorating due to “increased trade tensions”.
The Brookings -ft Tiger Index of Brookings compares indicators of real activity, financial markets and confidence with their historical averages, both for advanced and developing economies.
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Faith numbers for the JSC are particularly strict, showing lower levels of trust from the beginning of the index, along with a sharp deterioration in financial market conditions. Levels of faith in China and Germany also increased to depression levels.
Indicators of real activity in the US remained relatively strong, according to the report, but these are based on the data that operates by January 2025 and thus preach the presentation of Trump’s trade policies.
Some signs continue to indicate strong activity in the US, with 1.4 percent retail in March, although this may have been partially driven by an increase in vehicle sales while consumers seek to take ahead of tariffs.
The financial market index in the Tiger report withdrew the latest data, including its capital prices by mid -April. Business and consumer trust numbers go by the end of March, with the news reports used to extend the figures further this month.
“Uncertainty has severely painted the consumer’s confidence and is likely to receive a large number of business investments and increased employment,” Prasad said.
“The ability of the federal reserve to support the economy and the prevention of financial unrest will be limited by the transfer of tariffs to domestic inflation.”
The updated IMF growth forecasts are due to Tuesday. Private sector economists have reduced growth forecasts given the high policy uncertainty, weakening of feeling and hitting wealth from declining markets.
Citigroup analysts now see global growth of 2.1 percent of this year and 2.3 percent in 2026, according to a note last week, warning that the risks to their prediction were “strongly compressed in weakness”.
Meetings in Washington come while policymakers expect further clarity on the attitude of the new administration towards Bretton Woods institutions.
SH.BA, the largest shareholder in the IMF and the World Bank, has not yet to appoint a permanent director for one of the boards of organizations.
Neither the President and his secretary of Treasury Scott Bessent have signaled that they want to implement a recommendation at the 2025 Conservative Project Manifesto, published in 2023 by the Heritage Foundation, to “complete” US financial contributions to the IMF and World Bank.
But the administration has begun a summary of the US role and support for international institutions. Bessent is expected to address the policies of the new administration in the IMF and the World Bank in a discussion on Wednesday.
Some Republican lawmakers are seeking a change of access to institutions. French Hill, who heads the Financial Services Home Committee, has protected for a “Back to Bases” approach, where the fund focuses on areas such as macroeconomic supervision and is clear on trying to ensure finance to mitigate climate change.
Both Georgieva and World Bank President Ajay Banga have met with Bessent in recent weeks, according to people close to them.
Additional reporting by Aime Williams in Washington
