Lutnick Forecasts Explosive U.S. GDP Growth Amid Tensions over EU Tariffs

U.S. Commerce Secretary Howard Lutnick predicts over 5% GDP growth in Q1 2026, suggesting high interest rates hinder economic expansion. He warns the EU against retaliating to President Trump's tariff threats related to Greenland. He predicts peaceful outcomes despite potential trade tensions. IMF forecasts lower growth at 2.4%.

At the World Economic Forum's annual meeting in Davos, U.S. Commerce Secretary Howard Lutnick projected that the U.S. would experience a GDP growth exceeding 5% in the first quarter of 2026. Lutnick expressed concerns that elevated interest rates were stifling the economy's potential for more robust expansion.

Lutnick also cautioned the European Union against retaliating over President Donald Trump's proposed tariffs linked to Greenland acquisition efforts. Highlighting the restrictions posed by high rates, he claimed the potential for even higher growth if financial conditions were more favorable.

While Lutnick's predictions were more optimistic than those of U.S. Treasury Secretary Scott Bessent, who forecasted 4%-5% growth, the International Monetary Fund provided a more conservative estimate, projecting 2.4% growth. Tensions could escalate with Trump's tariff threats, but Lutnick foresees a peaceful resolution akin to the previous EU-U.S. trade disputes.

(With inputs from agencies.)