Economic uncertainty is now higher than it ever was during COVID

THE International Monetary Fund (IMF) has just published its World Economic Outlook, and it does not take an expert to deduce that, even among some of the world's top economic minds, confident predictions are currently hard to come by.

- SERGI BASCO

For its 2025 Spring Meeting the IMF has published a baseline forecast, as well as an addendum analysing the tariff events that took place between 9 and 14 April. According to the Fund's report, world GDP will grow by 2.8% in 2025 and 3.0% in 2026. For the euro area, growth will be 0.8% and 1.2% for 2025 and 2026 respectively.

These forecasts represent a substantial downward revision from IMF figures published just three months ago. Globally, growth in 2025 is down by 0.5% compared to the Fund's January update, with a reduction of 0.2% for the euro area.

One major shift is key to understanding the most recent IMF report and its pessimistic predictions: we live in a much more uncertain world than we did three months ago.

If one had to sum up the new US tariff policy in a word, "unpredictable" would suffice, as the so-called "Liberation Day" of 2 April 2025 represented the largest tariff increase in modern history.

Just one week later, the US president then made two further announcements. First, a 90-day freeze on tariff hikes, apparently in search of bilateral agreements with the countries to which he had applied tariffs above 10%. Second, that China would be excluded from this exception, with tariffs on its products being raised to 145%.