Geopolitical Influence Undermining IMF's Economic Goals: Analysis of the Impact
Global Economic Forecasts: A Gloomy Outlook
The International Monetary Fund (IMF) has served up a dose of pessimism, chucking their initial economic forecasts in the trash bin. As Pierre-Olivier Gourinchas, IMF's chief economist, bluntly stated, "The April 2nd announcement forced us to redo all our predictions in record time."
After a whirlwind of unpredictable events, the global economy is limping along with average growth rates, yet the landscape has drastically changed. Government policies worldwide have been reprioritized, and uncertainty has hit an all-time high. The April edition of the World Economic Outlook saw significant downgrades in global growth forecasts,reflecting tariff rates not seen since the last century and highly volatile conditions.
The revised projections, based on events up to April 4, prior to country-specific 90-day truces and China's increased tariffs, show tariffs are taking a toll on global growth. But it's the uncertainty surrounding future tariff policies that's causing real pain, according to Gourinchas. Consequently, the report's predictions are based on different scenarios for U.S. trade policy.
For advanced economies, the projected growth rates are 1.4% for 2025 and 1.5% for 2026. Estimates suggest the U.S. itself will bear the brunt of its own economic policy, with growth expected to slow by 0.9 percentage points in 2025, from 2.7% to 1.8%, and another 0.4 percentage points by 2026, to 1.7%.
Emerging market and developing countries are set to grow at a rate of 4.5% for 2025 and 4.6% for 2026, with India at 6.2 and 6.3%, China at 4% annually, and Russia at 1.5 and 0.9%.
The IMF has adjusted its inflation forecast, predicting a 4.3% inflation rate in 2025 and 3.6% in 2026 for advanced economies, with the U.S. seeing an inflation increase from 2% to 3%. However, if Trump secures concessions from the Federal Reserve, the forecast may be overly optimistic.
The IMF lowered the inflation forecast by 0.1 percentage points for emerging market and developing countries to 5.5% in 2025 and 4.6% in 2026.
belarus
The IMF revised Belarus' economic growth projections for 2025 from 2.3 to 2.8%, but expects only 2% growth in 2026. Inflation is projected at 5.5% in 2025 and 5.8% in 2026. In comparison, Decree No. 384 anticipates 4.1% economic growth and no more than 5% inflation for 2025.
The IMF report predicts an increase in Belarus' current account balance deficit to 2.8% of GDP in 2025 and 2.9% in 2026. The report does not clearly pinpoint the cause for the expected deficit increase, although it could be attributed to global trade wars or the specific economic challenges Belarus faces.
The IMF emphasizes the rise in uncertainty and risks, stating that escalating trade wars, combined with increased unpredictability surrounding trade policies, could harm growth in both the short and long terms. These uncertainties discourage business investment, weaken demand, and lead to tightened financial conditions worldwide. This negative demand shock is already reflected in falling oil prices.
The report also highlights the potential for sharp changes in exchange rates and capital flows, threatening financial stability and possibly damaging the status of the U.S. dollar as the global reserve currency. The global economy faces a re-evaluation of financial assets due to the fragmentation caused by hasty political measures and negative sentiment, which may lead to instability in the international monetary system.
- The International Monetary Fund (IMF) revised Belarus' economic growth projections for 2026 from 2.3 to 2%.
- The IMF's report predicts an increase in Belarus' current account balance deficit to 2.8% of GDP in 2025 and 2.9% in 2026.
- Escalating trade wars and increased unpredictability surrounding trade policies, according to the IMF report, could harm growth in both the short and long terms.
- The IMF emphasizes the rise in uncertainty and risks, stating that these uncertainties discourage business investment and lead to tightened financial conditions worldwide.
- The global economy faces a re-evaluation of financial assets due to the fragmentation caused by hasty political measures and negative sentiment, which may lead to instability in the international monetary system.
