Trade Tensions Impact Global Growth

By Karin Strohecker, Andrea Shalal, and David Lawder

WASHINGTON (Reuters) – International Monetary Fund (IMF) member countries expressed concerns over rising trade tensions, noting these factors are hindering growth and increasing market and financial stability risks. Nevertheless, they reaffirmed their commitment to the IMF as essential for navigating effectively through such challenges.

In a chair’s statement, the IMF’s steering committee also emphasized prior foreign exchange commitments, advocating for a realignment of quotas that accurately reflects member countries’ positions in the global economy.

>The IMFC stated, “The world economy is at a pivotal juncture… trade tensions have soared, fueling uncertainty, market volatility, and risks to growth and financial stability.”

These remarks followed a week of heightened anxiety among policymakers and investors regarding U.S. President Trump’s disruptive approach to global trade and his stance toward international institutions.

On Tuesday, the IMF revised down its economic forecasts for the U.S., China, and most countries, attributing this to the effects of U.S. tariffs at a century-high level, warning that escalating trade conflicts could further decelerate growth. The IMF projects global growth at 2.8% for 2025, a reduction of half a percentage point compared to earlier estimates.

Saudi Arabia’s Finance Minister Mohammed Al-Jadaan, chair of the IMFC, underscored the importance of focusing on core mandates like trade expansion and growth, particularly addressing global debt vulnerabilities for low-income countries.

IMF Managing Director Kristalina Georgieva noted that current geopolitical tensions, especially Trump’s tariff policies, have overshadowed discussions on other pressing matters, including artificial intelligence. Although there was open dialogue among members, she acknowledged ongoing challenges.

Al-Jadaan remarked that recent meetings emphasized trade concerns but expressed optimism about collaborative efforts to achieve solutions. He stated, “We are in a better position than when we started the week; people understand the consequences and are collaboratively addressing tensions.”