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Global growth threats increase as the commercial shock focused on the United States crushes trust and slamming financial markets, according to the search for the Financial Times before the key meetings of Washington economic decision-makers this week.
The trusted indicators have dropped sharply while the financial market conditions have deteriorated, according to the BrooKings-FT monitoring indices for the global economic recovery, or Tiger. Deterioration in the Global prospect is a contrast marked with the relatively firm start of the year.
ESWAR PRASAD, a principal researcher at Brookings Institution, said that it would be “premature” to predict a global recession, but warned that the breakdown of global trade and the uncertainty of higher policies would considerably remove growth.
“We saw this huge shock,” said Prasad. “Each open economy based on trade will be in a hurry, and in addition to that, you will have effects of confidence (negative).”
The conclusions come as economic decision -makers and finance ministers from around the world to meet in Washington for the first set of Spring meetings of the IMF / World Bank since the inauguration of Donald Trump as an American president.
Kristalina Georgieva, Director General of the IMFOn Thursday, warned that the fund was preparing to reduce growth forecasts, because “the volatility of the financial markets is up” and that “the uncertainty of the commercial policy is literally outside the graphics”.
In January, the Fund predicted global growth of 3.3% this year and next year, the United States being planned for an expansion of 2.7% this year and 2.1% in 2026.
Trump's decision to announce radical rates on most American trade partners on April 2 has established a sharp drop in financial markets and a gang of growth forecasts.
On Thursday, the European Central Bank reduced its key interest rate to 2.25% while it was preparing for the benefits of commercial wars, warning that growth prospects had deteriorated due to the “increase in trade tensions”.
The streams twice Tiger index Compare the indicators of real activity, financial markets and confidence in their historical averages, both for advanced economies and emerging averages.
Confidence figures for the United States are particularly austere, showing the lowest levels of confidence since the start of the index, in parallel with a high deterioration in financial market conditions. The levels of confidence in China and Germany have also hovered at depressed levels.
The real activity indicators in the United States have remained relatively strong, according to the report, but these are based on data executed until January 2025 and are therefore prior to the introduction of Trump's trade policies.
Some signs continue to point to firm activities in the United States, retail sales jumping 1.4% in March, although it may have been partly motivated by an increase in automotive sales while consumers seek to get ahead of prices.
The financial market index in the Tiger report relied on more recent data, including stock prices until mid-April. The confidence numbers of companies and consumers take place at the end of March, with reports used to extend the figures further this month.
“Uncertainty has severely descended consumer confidence and is likely to wreak havoc on business investment and employment growth,” said Prasad.
“The ability of the federal reserve to support the economy and prevent financial disorders will be limited by the passage of prices in domestic inflation.”
IMF updated growth forecasts are due on Tuesday. Private economists have reduced growth forecasts given high political uncertainty, weaken the feeling and the blow to the wealth of the decrease markets.
Citigroup analysts are now seeing global growth of 2.1% this year and 2.3% in 2026, according to a note last week, warning that the risks of their forecasts were “strongly biased down”.
Washington meetings come as political decision -makers are waiting for greater clarity on the position of the new administration towards the Bretton Woods institutions.
The United States, the largest shareholder in the IMF and the World Bank, have not yet appointed permanent director for one or the other of the organization's boards of directors.
Neither the president nor his secretary of the Treasury, Scott Bessent, had pointed out that they wanted to implement a recommendation in the manifesto of the conservative 2025 project, published in 2023 by the Heritage Foundation, to “end” financial contributions in the United States in the IMF and the World Bank.
But the administration launched an examination in the role and support of the United States to international institutions. Bessent is expected to tackle the policies of the new administration on the IMF and the World Bank in a discussion on Wednesday.
Some Republican legislators are looking for a change of approach to institutions. French Hill, who chairs the Chamber's Financial Services Committee, pleaded for a “Back To Basics” approach, where the fund is focused on areas such as macroeconomic surveillance and remains away from trying to provide finances to mitigate climate change.
Georgieva and the president of the World Bank, Ajay Banga, have met in recent weeks, according to close people.
Additional love reports Williams in Washington
