World economy likely to avoid recession despite tariffs: IMF

The global economy is likely to avoid a recession despite the hit to growth from US President Donald Trump's tariff rollout, the head of the International Monetary Fund () said on Thursday.

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The stop-start US tariff plans have fueled levels of market volatility unseen since the Covid-19 pandemic, and most economists expect the imposition of new import levies will stifle growth and push up inflation, at least in the short term.

Trade disruptions "incur costs," IMF Managing Director Kristalina Georgieva told reporters in Washington on Thursday, adding that the Fund now expects "notable" cuts to growth - but no recession.

People live in a world of "sudden and sweeping shifts," she said, in a nod to the recent market volatility.

"It is a call to respond wisely," she added.

Her speech came ahead of next week's Spring Meetings - a gathering of global financial leaders co-hosted by the IMF and the World Bank in the US capital.

Her remarks suggest the IMF will use its upcoming World Economic Report, to be published on Tuesday, to pare back its previous forecast for global growth to hit 3.3 per cent in 2025 and 2026.

- 'Perceptions matter' - Georgieva said the current tariff tensions would likely have three major consequences for the global economy, with smaller advanced economies and most emerging markets likely to be more heavily affected due to their reliance on trade for growth.

"First, uncertainty is costly," she said, adding that it becomes difficult for business to make plans if they do not know how much their inputs will cost in the future.