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ADVERTISEMENTThe conflict in the Middle East will further worsen the global economic outlook, already strained by ongoing trade disputes, the managing director of the International Monetary Fund (FMI) has told Euronews in an interview.
“Being hit by a trade war has consequences. We have projected a decline in global growth by half a percentage point,” Kristalina Georgieva said, adding: “What we witness now is more turbulence in the Middle East, which adds to uncertainty and therefore is bad for business.”
Since Donald Trump’s return to power as leader of the world’s largest economy, international trade has been disrupted by a wave of tariffs imposed by the US administration on its global partners.
Mexico and Canada were the initial targets, followed by a prolonged standoff between the US and China, which saw reciprocal tariffs between the pair soar to more than 100%.
On 2 April— a day he dubbed «Liberation Day»—Trump imposed tariffs on a wide range of countries, including the EU. He then declared a 90-day truce, set to expire on 9 July.
Negotiations are currently underway with the EU, which currently faces tariffs of 50% on steel and aluminum, 25% on cars, and 10% on all its exports to the US.
However, the director of the IMF, which is responsible for financial stability across the world and facilitate global trade, admitted that “the global economy has proven to be remarkably resilient to shocks, and that resilience continues.”
In her view, economic uncertainty is becoming the new normal.
“We live in a more shock-prone world, a world of higher uncertainty,” Georgieva said, adding: “For this world, countries need to work hard to be more resilient. Do reforms at home that would make your economies stronger.”
Georgieva, a former vice-president of the European Commission, also expressed optimism with the economic outlook despite the bleak growth figures.
She considered that the recent trade agreement between China and the US and the deal Trump has brokered with the UK to be good signs, saying: “We are in a better place.”
In an uncertain context, she also sees opportunities to be seized—an outlook shared by the European Commission, which is pursuing a strategy of diversifying its trading partners by expanding the number of trade agreements worldwide.
“In Europe, we see an increase in bilateral and plurilateral agreements, which I expect to be a big feature of the future of trade globally,” she told Euronews, adding that it is a great moment for Europe, “a defender of rules-based” global trade exchanges.
