Global Economy Steadies Amid Tariff Turnaround

IMF's Georgieva highlights the global economy's resilience bolstered by non-retaliation against U.S. tariffs and effective trade policies. The IMF forecasts an improved GDP growth rate of 3.2% by 2025, although potential risks persist, including geopolitical tensions and market speculation, particularly in the tech sector.

The global economy has shown resilience, with many countries choosing not to retaliate against U.S. President Donald Trump's tariffs, said IMF Managing Director Kristalina Georgieva. This decision has helped avoid a debilitating escalation of trade barriers, as was discussed at an IMF and World Bank event in Washington.

The IMF's World Economic Outlook report has revised the 2025 global GDP growth forecast to 3.2%, up from an earlier 3.0%. However, potential risks, such as a renewed U.S.-China trade war, remain a threat. The U.S. has reduced its overall effective tariff rate through deals with major partners, helping support global economic growth.

Despite these positive signs, challenges loom, especially in inflated global market valuations, notably in the tech industry. IMF chief economist Pierre-Olivier Gourinchas warned of a potential bust reminiscent of the dotcom crash, though it is unlikely to trigger a systemic crisis as investments are not significantly debt-funded.

(With inputs from agencies.)