NEW DELHI: The IMF on Monday cautioned against adverse impact of trade tensions on economies across the world and lowered the growth projection to 2.8% from 3% earlier.
The global uncertainty is also expected to weigh on India’s growth, with the expansion estimate cut to 6.2% from 6.5%, despite strong private consumption, especially in rural areas.
“Intensifying downside risks dominate the outlook. Ratcheting up a trade war, along with even more elevated trade policy uncertainty, could further reduce near- and long-term growth, while eroded policy buffers weaken resilience to future shocks. Divergent and rapidly shifting policy stances or deteriorating sentiment could trigger additional repricing of assets beyond what took place after the announcement of sweeping US tariffs on April 2 and sharp adjustments in foreign exchange rates and capital flows, especially for economies already facing debt distress.Broader financial instability may ensue, including damage to the international monetary system,” the agency said in its latestWorld Economic Outlook.
The forecasts for 2025 include significant downward revisions for Canada, Japan, the UK, and the US and an upward revision for Spain.